Money and capital as competing media of exchange
By: Ricardo Lagos and Guillaume Rocheteau.
Contributors: Rocheteau, Guillaume.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 341; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 341.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2004
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Money.; Liquidity (Economics)
Description: "We construct a model where capital competes with fiat money as a medium of exchange, and we establish conditions on fundamentals under which fiat money can be both valued and socially beneficial.  When the socially efficient stock of capital is too low to provide the liquidity agents need, they overaccumulate productive assets to use as media of exchange.  When this is the case, there exists a monetary equilibrium that dominates the nonmonetary one in terms of welfare.  Under the Friedman Rule, fiat money provides just enough liquidity so that agents choose to accumulate the same capital stock a social planner would"--Federal Reserve Bank of Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 11/10/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.