Limited commitment and the legal restrictions theory of the demand for money

The Societal Benefits of Money and Interest Bearing Debt

“…7 We consider situations in which the sellers refuse to trade with any buyer not having a good record. 8 If both traders in a DM meeting have chosen "real loans", the record-keeping technology is available in the meeting, and the buyer makes a take-it-or-leave-it o¤er of a spot monetary payment plus a promise of delayed payment in the CM to the seller in exchange of an amount q of the consumption good, where the payment o¤er cannot exceed m + h 1 , with the CM repayment at least as large as h (D) for the buyer to be able to keep a good record. If, instead, one of the traders has chosen "monetary loans", the record-keeping technology is not available and only money can be used as payment for the good.…”

“…As in the case with money and private debt, we focus on stationary symmetric equilibria, with time invariant Government policy (x; ). At a stationary equilibrium, by (8), the growth rate of the money stock is…”

“…Relatedly, inFerraris and Mattesini (2014), bonds are imperfect substitutes of money, since they are issued with a minimum size, unlike money 2. For instance, Lagos (2013) argues that di¤erent denominations do not currently apply to the US economy (page 149).…”