A model of a currency shortage

Neil Wallace, Ruilin Zhou

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Until the mid-19th century, shortages of currency were common. Moreover, a frequent policy response was a prohibition on the export of coins. We use a random matching model with indivisible money to explain a shortage and to judge the desirability of a prohibition on the export of coins. The model, although extreme in many regards, represents better than earlier models a demand for outside money and the problems that arise when that money is indivisible. It can also rationalize a prohibition on the export of money.

Original languageEnglish (US)
Pages (from-to)555-572
Number of pages18
JournalJournal of Monetary Economics
Issue number3
StatePublished - Dec 1997

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics


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