The Bootstrap Theory of Money : A Search-Theoretic Foundation of Monetary Economics

@inproceedings{Iwai2005TheBT,
  title={The Bootstrap Theory of Money : A Search-Theoretic Foundation of Monetary Economics},
  author={K. Iwai and Takashi Negishi and Tadashi Shigoka},
  year={2005}
}
The paper develops a search-theoretic model of decentralized economy with heterogeneous individuals trading goods endowed for goods in need among themselves. It characterizes both barter and monetary system as two different forms of trade equilibrium and demonstrates that while the existence of barter equilibrium requires a well-balanced distribution of endowments and needs, that of monetary equilibrium requires no "real" conditions. Indeed it argues that money is accepted as money by everybody… CONTINUE READING

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