The development of non-monetary means of payment

Minzyuk, Larysa (2010): The development of non-monetary means of payment.

Abstract

This paper develops a model to investigate the private enforcement of non-monetary inter-firm payments in Russia during the 1990s. Since acceptability of means of payment can have a self-reinforcing nature, the dominance of non-monetary means of payment over money in Russia might have been a result of the driving forces of the demonetiziation equilibrium. We propose a very simple search model to explore acceptability of means of payment different from legal tender - fiat money, commodity money, and trade credit. In each case, we show that monetization through the proposed means of payment is always a possible trade pattern.

• Item Type: MPRA Paper
• Language: English
• Keywords: privately created means of payment; fiat money; commodity money; reputations; Russia
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; E - Macroeconomics and Monetary Economics > E0 - General > E00 - General

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