TEL  Vol.3 No.4 , August 2013
Inseparability of Transaction Medium and Store of Value in the Role of Money
Author(s) Masayuki Otaki*
ABSTRACT

We analyze whether or not money can be circulated as a purely transaction medium in the search theory. We obtain the following result: unless the role of a store of value added to the function of money, money does not circulate and the economy degenerates into a barter economy.


Cite this paper
M. Otaki, "Inseparability of Transaction Medium and Store of Value in the Role of Money," Theoretical Economics Letters, Vol. 3 No. 4, 2013, pp. 226-228. doi: 10.4236/tel.2013.34038.
References
[1]   N. Kiyotaki and R. A. Wright, “A Contribution to the Pure Theory of Money,” Journal of Economic Theory, Vol. 23, No. 1, 1991, pp. 215-235. doi:10.1016/0022-0531(91)90154-V

[2]   P. A. Diamond, “Aggregate-Demand Management in Search Equilibrium,” Journal of Political Economy, Vol. 90, No. 5, 1882, pp. 881-894. doi:10.1086/261099

[3]   R. E. Lucas Jr., “Expectations and the Neutrality of Money,” Journal of Economic Theory, Vol. 4, No. 2, 1972, pp. 103-124. doi:10.1016/0022-0531(72)90142-1

[4]   M. Otaki, “The Dynamically Extended Keynesian Cross and the Welfare-Improving Fiscal Policy,” Economics Letters, Vol. 96, No. 1, 2007, pp. 23-29. doi:10.1016/j.econlet.2006.12.005

 
 
Top