Creator

• Kocherlakota, Narayana Rao, 1963-

Series

• Quarterly review (Federal Reserve Bank of Minneapolis. Research Department)

Issue number

• Vol. 22, No. 3

Date created

• 1998 Summer

Abstract

• This article argues that fiat money’s only technological role in an economy is to act as societal memory: money allows people to credibly record some aspects of their transactions and make that record accessible to other people. This record-keeping role is demonstrated in the three standard paradigms of fiat money: the overlapping generations, turnpike, and search models. In these models, if a new economy is created by removing the money and replacing it only with a historical record of all transactions, known to everyone in the economy, then the original monetary allocation is still achievable as an equilibrium.

Related information

• This article is a less technical presentation of the ideas in the author’s study, “Money is Memory,” published in the Journal of Economic Theory (Vol. 81, Iss. 2, August 1998, pp. 232-251). The article appears in the Minneapolis Fed’s Quarterly Review with the permission of Academic Press. https://doi.org/10.1006/jeth.1997.2357

Corporate Author

• Federal Reserve Bank of Minneapolis. Research Department

Publisher

• Federal Reserve Bank of Minneapolis

Resource type

• Article

DOI

•  https://doi.org/10.21034/qr.2231

In Collection:

• Quarterly Review

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