Money and specialization |
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Authors: | Shouyong Shi |
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Institution: | (1) Department of Economics, Queen’s University, Kingston, Ontario, CANADA K7L 3N6, CA |
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Abstract: | Summary. This paper examines the relationship between specialization and the use of money in two versions of the search-theoretic
monetary model. The first version establishes a surprising result that specialization is more likely to occur in a barter
economy than in a monetary economy. The result is reversed in the second version where a different specification of preferences
is adopted to limit the scope of barter. This contrast between the results provides a concrete illustration of the general
argument that money encourages specialization only when it enlarges the extent of the market.
Received: January 31, 1995; revised version August 12, 1996 |
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Keywords: | JEL Classification Numbers: E40 D40 |
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