Acceptability, means of payment, and media of exchange

Nobuhiro Kiyotaki and Randall Wright

Quarterly Review, 1992, vol. 16, issue Sum, 18-21

Abstract: This essay explains the use of fiat money, or why intrinsically useless objects are accepted as payment in transactions. People accept a particular object as a means of payment because others do: social conventions matter more than the intrinsic characteristics of the object itself. Not everything can become a fiat money, though. If an object is especially costly to hold, for example, it will not be accepted as a means of payment. This explanation of fiat money is illustrated in a simple theoretical economic model. ; This essay was originally published in The New Palgrave Dictionary of Money and Finance. It is reprinted in this journal with the permission of Macmillan Press and Stockton Press.

Keywords: Money; theory (search for similar items in EconPapers)
Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://minneapolisfed.org/research/qr/qr1632.pdf (application/pdf)
http://minneapolisfed.org/research/qr/qr1632.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmqr:y:1992:i:sum:p:18-21:n:v.16no.3

Access Statistics for this article

More articles in Quarterly Review from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().