Quotes from “The Transactions Role of Money”

By Joseph Ostroy (1990)

• The transactions role of money cannot be separated from its function as a store of value. If after the sale of one commodity for money, but before the purchase of another commodity with it, money perished, it could hardly serve as a medium separating purchase from sale. #
  EconomicsMoney
• In an exchange economy, putting money, even real money balances, into the utility function is an unreliable choice-theoretic short cut for modelling the transactions role of money.#
  EconomicsMoneyMethodology
• For trades to be enforceable they must be dependent on one’s actual trading history and not on ex ante expected values while for trades to be efficient the reverse must be true.#
  Economics
• the Arrow-Debreu theory establishes sufficient conditions for money to be useless and positively denies it any intertemporal allocative function. Though striking, this conclusion is unsurprising; money has no job to perform here because its job is being done by futures markets. . . . Conversely, if the conditions that allow the futures markets so fully to exercise their function are absent, we may expect a role for money and for futures markets in money (debt instruments). #
  EconomicsMethodology