. Specifically, they characterize the optimal return on money in the presence of credit arrangements. There is a dual role for credit …: It allows buyers to trade without fiat money and also permits them to borrow against future income. However, not all … traders have access to credit. As a result, there is a social role for fiat money because it allows agents to self …

Lagos and Wright (2005) demonstrate how the essential properties of a money-search model are preserved in an … markets under limited commitment and private information. The analysis demonstrates clearly how insurance, credit, and money … the Friedman rule. In particular, I find that the same frictions that render money essential may at the same time operate …