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Cambridge Journal of Economics Advance Access published online on August 8, 2005
Cambridge Journal of Economics, doi:10.1093/cje/bei060
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© The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.
Received July 26, 2003
Revised November 9, 2004

Article

Doing without money: a critical assessment of Woodford's analysis

C. Rogers 1*

1 School of Economics, University of Adelaide

* To whom correspondence should be addressed.
C. Rogers, E-mail: colin.rogers{at}adelaide.edu.au


  Abstract

Woodford employs an inter-temporal general equilibrium model to examine the properties of the monetary system as it evolves from the use of a physical medium of exchange to an electronic medium. He presents a structure in which cash as a means of payment can be made to vanish at the limit, but where he claims the price level remains determinate. It is shown that Woodford's analysis involves fundamental but still widespread conceptual and methodological errors. His general equilibrium model does not map into the world of electronic money, and his analysis has no implications for the art of central banking.

Keywords: Electronic money; Cashless limit; Hahn property; Accounting systems of exchange.
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