The results here are similar to those found in a barter economy; namely, as Equation 8 indicates, a uniform radial reduction of import tariffs has an ambiguous effect on government revenue.
Again the results regarding market access are similar to those in a barter economy (see Ju and Krishna 2000).
We apply this body of theory to money-using economies such as our own because we believe that for many problems the fact that money is used in attaining equilibrium can be abstracted from, or that the theoretical barter economy
is a tractable, idealized model which approximates well (is well-approximated by) the actual monetary economy.
75], "the limiting position that we have defined as a barter economy is one in which there exists the same real quantity of money as in a money economy." The absurdity of this convoluted outcome is accorded the excuse profered by Patinkin that "there does not seem to be any other meaningful way of comparing the respective equilibrium positions of a barter and money economy." Precisely: it is hard to imbue a reductio ad absurdum with meaning.
In a barter economy, agents must search for partners (think of the 'double-coincidence' argument), and there may now be a role for middlemen where there was none before." But Hahn's anatomy of autarky places him [1982, p.
What praxeology has to say, and what matters as far as the regression theorem is concerned, is that it is logically impossible for any new money to emerge unless there is some sort of existing price structure in place Without prior prices present in some form, actors cannot calculate using the new money And, therefore, if no price ratios have been established monetarily between the various goods and services, they can only be obtained through a process of direct exchange in the barter economy This is the crux of the regression theorem But there is no praxeological necessity for the new money to be redeemable for the old in law, or to trade at a fixed rate with it.
This is in contrast to the praxeological necessities dictated by the regression theorem From a praxeological perspective, it is clear from the foregoing discussion there are two separate circumstances in which a new medium of exchange can start to function as a means of calculation and unit of account: (1) The new medium emerges from a pure barter economy, in which case it must have some previous direct-use value, or (2) it emerges when there is an existing money-price structure in place, or at least the memory of one.
If [[Phi].sub.1] = [[Phi].sub.2] = 0, as it is the case in any barter economy, then [Gamma] = 0, resulting in the familiar condition MDRS = p.
In the special case of a barter economy, [[Phi].sub.1] = [[Phi].sub.2] = [Gamma] = 0 and this indirect effect vanishes; hence, a tightening of the import quota (dQ [less than] 0) always lowers social welfare [notice from (9) that if [Gamma] = 0 then dU/dQ = (p-[p.sup.*])[U.sub.1] [greater than] 0, where p [greater than] [p.sup.*] since the quota generates a wedge between the domestic- and world-price ratio].
Our version is specifically designed to demonstrate the limitations and inefficiencies of the traditional barter economy
and to emphasize the role of money as a medium of exchange, unit of account, and store of value.(2) In addition, this experiment helps in demonstrating some of the key features that an object that serves as money should possess in order to function effectively and efficiently.
This is best illustrated by Menger's ( 1976) famous description of the bottom-up, evolutionary process whereby the most marketable commodity assumes the role of a universal means of exchange upon outcompeting all of its less marketable rivals, thus transforming a barter economy
into a monetary economy.
It's unofficial, but a week of reading Gulf News leads to one reasonable conclusion: we are in a barter economy
. Cash is no longer simply a means of exchange - it has become a valuable commodity.