ABSTRACT OF PAPER
Title: The money indirect utility approach after Patinkin: mechanisms and properties of monetary exchange
Author: Torre Dominique
When money has no intrinsic value, there is no reason to put it inside utility functions. After Patinkin works, money is then usually outside utility function and has only an ``indirect utility" depending on the utility of goods and services it allows to access. This indirect utility is viewed as encompassing both the role of reserve of values of money and its role of exchange intermediary. Rapidly, the reserve of value role is however denied, due to the existence of riskless assets dominating money in terms of return. Subsequent works then concentrate on the properties of accepted exchange intermediaries and on their capacity to provide an access to efficient equilibriums. Section 2 identifies 4 ways the intermediary of exchange functions of money are justified from the late sixties to the late seventies and discusses the properties of the monetary equilibrium associated to these approaches. Locally accepted currencies are used given transaction costs of barter exchange, given also spatially separated markets, given also legal restrictions of credit and asset circulation, given at last the sequentiality of transactions. Each time, the existence of monetary equilibriums is proved during the seventies and the efficiency properties of these equilibriums are exhibited. We review these properties, discuss their interest and limits. Then in section 3, we address the question of the emergence of these means of exchange. The revival of Jevonian and Mengerian approaches is related through the transaction costs approach (Jones 1972), search theoretic models (Kiyotaki and Wright, 1989, 1991), and approaches exploring the role of money in the realization if a decentralized equilibrium (Starr, Ostroy, Feldman...). Even these approaches are not fully successful: they ignore time dependency in the choice of local and international currencies. They are also poorly able to associate money and institutions, while macro approaches have chosen this direction for the late nineties.
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