Econometrica: Nov 1979, Volume 47, Issue 6

Expectations and Money in a Dynamic Exchange Model

https://doi.org/0012-9682(197911)47:6<1403:EAMIAD>2.0.CO;2-9
p. 1403-1420

Milton Harris

This paper provides an explanation for the observed widespread use of a money good with little intrinsic value. The explanation derives from the result that if agents expect some particular good to play the role of money, then sequential, pairwise trading leads to an economy-wide Pareto optimal allocation.
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