A coordination approach to the essentiality of money

• Autor(a) principal: Araujo, Luis Fernando Oliveira de
• Data de Publicação: 2015
• Outros Autores: Guimarães, Bernardo de Vasconcellos
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/13531
• topic: Money; Credit; Beliefs; Coordination; Economia; Moeda; Crédito bancário

The essentiality of money is commonly justi ed on e¢ ciency grounds. In this paper, we propose an alternative view on the essentiality of money. We consider an economy with llimited monitoring where agents have to coordinate on the use of two alternative technologies of exchange, money and credit. We show that although credit strictly dominates money from an e¢ ciency perspective, money is essential for coordination reasons. If agents are patient, the region of parameters where they coordinate in the use of money strictly contains the region of parameters where they coordinate in the use of credit