Turnpike model of money
 | This article may be too technical for most readers to understand. (July 2013) |
The turnpike model of money explains valued money as a way to facilitate trade between agents who meet as strangers in spatially separated isolated markets with no communication or transactions between the markets at any time.
In the standard
Clower constraint). However all of these approaches are somewhat ad hoc and do not explain why intrinsically worthless money can have value as medium of exchange. The turnpike model of money is one of the possible resolutions of this theoretical problem.[1]
References
- ^ Townsend R. Models of Money with Spatially Separated Agents, in Models of Monetary Economies, John Kareken and Neil Wallace, eds., Federal Reserve Bank of Minneapolis, 1980, 265-303.
- Sargent, Thomas J. and Lars Ljungqvist (2004). Recursive Macroeconomic Theory. Cambridge, Massachusetts: The MIT Press. ISBN 0-262-12274-X.