Date of Award


Degree Type


Degree Name

Doctor of Philosophy


This thesis contains three essays studying the emergence of money as a medium of exchange. The search framework used resumes it is difficult for agents to come together in order to trade. The result is a double coincidence of wants problem that can be alleviated through the use of money as a medium of exchange. Much of the recent work studying search models of money is based on papers by Kiyotaki and Wright. This thesis extends their work to make this area of monetary economics more applicable.;Chapter 1 of the thesis introduces a credit instrument into the search model to show that, unlike many other monetary models, money and credit can coexist in equilibrium. Under certain conditions, agents will trade using both money and credit if they believe that other agents will also. Both money and credit may be welfare improving when the double coincidence of wants problem is sufficiently bad.;Chapter 2 relaxes some of the more restrictive inventory assumptions in the basic model and introduces an endogenous price determination mechanism. By allowing agents to store multiple units of money it is possible to introduce a Nash bargaining game between agents to determine the price at which they will trade in any match. When agents are restricted to hold finite levels of indivisible units, money will not be neutral. Only if agents are completely unrestricted in their holdings of money will money be neutral.;In the third chapter agents are permitted to produce the medium of exchange themselves. This model attempts to formalize within a search model some of the characteristics, described initially by Jevons, that a money should exhibit. It is found that only commodities that are more costly to produce than consumption goods can circulate as generally accepted media of exchange. Similarly, only commodities that are sufficiently durable and portable will function as money. Given that agents tend to overproduce money, there is a role for government to either tax the production of the commodity money or to introduce a flat money to reduce the amount of the private money in circulation.



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