Document Type
Discussion Paper
Publication Date
3-1-2004
CFDP Number
1455
CFDP Pages
38
Abstract
In this paper we present a series of models, all within the context of a simple two-good economy, which bring out the distinctions among the different types of money and financial institutions. The models emphasize the physical properties of the economic goods, moneys, and trading systems. Part 1 covers models in which the money is a consumable storable; the economies in Part 2 use durable money, fiat money, or credit. Under this framework we are able to successfully contrast the role of private money lenders, banks, bilateral credit systems, and credit clearinghouses. We are also able to model the importance of the bankruptcy or default penalty in supporting the use of fiat.
Recommended Citation
Quint, Thomas and Shubik, Martin, "An Elementary Discussion of Commodity Money, Fiat Money and Credit: Part 1" (2004). Cowles Foundation Discussion Papers. 1731.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1731