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Inseparability of Transaction Medium and Store of Value in the Role of Money

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DOI: 10.4236/tel.2013.34038    3,085 Downloads   4,426 Views   Citations
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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.

Conflicts of Interest

The authors declare no conflicts of interest.

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

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[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

  
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