Jean-Paul Chavas, Daniel W. Bromley
On the Origins and Evolving Role of Money
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- 10.1628/093245608786534631
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This paper explores the origins and evolving role of money. It stresses the role of money in solving coordination problems. This role is present with or without exchange. A historical overview of money stresses the evolutionary aspects of monetary institutions. The analysis develops a general evaluation of economic efficiency under transaction costs and imperfect information, and in the presence of public goods and externalities. It identifies a nonneutral role for money. It argues that the efficiency gains from exchange are only part of the benefits of a monetary economy.