This paper advances a model which can account for these five prominent facts of monetary economics.
Money is held in non trivial amounts even though it is a dominated asset.
Hyper-inflations can be ended with a minimal loss of output. Liquidity crises lead to recessions. Money is used to transfer income from the time it is received to the time it is spent because real assets are costly to liquidate, and capital markets are imperfect. And money improves the allocation of resources by providing flexibility to the timing of consumption and investment. In this model, monetary shocks affect total factor productivity.