ECON 102 Lecture Notes - Lecture 11: Bitcoin, Reduced Form, Utility
Document Summary
Hahn 1965 = money is essential if it allows agents to achieve allocations they can"t achieve with other mechanisms that also respect the enforcement and information constraints in the environment. Money is essential only if there are allocations in consumption/ investment that can"t be achieved without money. Care because these are fundamentally why we need this particular type of goods to improve situation of goods. If credible and enforcable, with contracts, then money wouldn"t be needed money for transactions: agents are anonymous, histories aren"t public information a) In modern economies it"s hard to enforce: money is a conseqeuence of the frction. Money is a conseqeunce of these frictions in trade so it"s a good medium of exchange. Money exists also because of store of value, related to overlapping generation models, way to store values, or unit of account. Have money because it"s a common numeraire but that"s not an essentiality of money.
