Coordination in the use of money

Bernardo Guimaraes and Luis Araujo ()

No 325, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: Fundamental models of money, while explicit about the frictions that render money essential, are silent on how agents actually coordinate in its use. This paper studies this coordination problem, providing an endogenous map between the primitives of the environment and the beliefs on the acceptability of money. We show that an increase in the frequency of trade meetings, besides its direct impact on payo¤s, facilitates coordination. In particular, for a large enough frequency of trade meetings, agents always coordinate in the use of money.

Date: 2013-08-02
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (5)

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Journal Article: Coordination in the use of money (2014)
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