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

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.

Share and Cite:

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.

Conflicts of Interest

The authors declare no conflicts of interest.

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

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.