Incentives to produce quality and the liquidity of money (*)

Alberto Trejos
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Alberto Trejos: Department of Economics, Northwestern University, 2003 Sheridan Road, Evanston, IL 60208, USA, and Institut d'AnÁlisi EconÔmica, Universitat AutÔnoma de Barcelona, Campus UAB-Bellaterra, E-08193 Bellaterra, SPAIN

Economic Theory, 1997, vol. 9, issue 2, 355-365

Abstract: I study a version of the Williamson-Wright (1994) model that results from ruling out direct barter. Although one can no longer argue that the value of money comes exclusively from private information, one can use the simplified model to address a variety of other issues. In particular, one can characterize analytically the set of equilibria and their properties. One can also analyze the trade-off between providing liquidity to facilitate trade and providing incentives to produce high quality, and address some other issues related to policy and welfare, including the effects of inflation on the incentives to produce high quality.

JEL-codes: D82 D83 E40 (search for similar items in EconPapers)
Date: 1997
Note: Received: May 10, 1995; revised October 9, 1995
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