A Walrasian Theory of Commodity Money: Paradoxical Results
UPF Economics & Business Working Paper No. 480
13 Pages Posted: 22 Nov 2000
Date Written: 2000
Abstract
The objective of this note is to analyze some implications of the model of commodity money described in Banerjee and Maskin (1996) which may seem paradoxical. In order to do this, we incorporate a general production cost structure into the model. We focus on two different results. First, the existence of technologies that make counterfeiting a commodity more difficult may exclude it from being used as medium of exchange. Second, allocative distortions due to problems of asymmetric information may become larger in the presence of such technologies.
Keywords: Money, lemons
JEL Classification: D50, D82, E40
Suggested Citation: Suggested Citation