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Money and the gains from trade

Berentsen, A. and Rocheteau, G.. (2003) Money and the gains from trade. International economic review, Vol. 44, H. 1. pp. 263-297.

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Official URL: http://edoc.unibas.ch/dok/A5249123

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Abstract

This article studies the role of money in environments where in each meeting there is a double coincidence of real wants. Traders who meet at random finance their purchases through current production, the sale of divisible money or both. It is shown that in the absence of valued money if traders have asymmetric tastes for each other`s good, they produce and exchange socially inefficient quantities. With valued money, however, traders exchange efficient quantities if the asymmetry of tastes is not too large. It is shown that the gains from trade in the monetary economy are strictly greater than those in the corresponding barter economy, that the Friedman rule holds, and that the allocation of resources in the monetary economy converges to the allocation in the barter economy as the growth rate of the money supply is increased.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen)
UniBasel Contributors:Berentsen, Aleksander
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Univ. of Pennsylvania Press
ISSN:0020-6598
Note:Publication type according to Uni Basel Research Database: Journal article
Identification Number:
Last Modified:22 Mar 2012 14:29
Deposited On:22 Mar 2012 14:06

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