COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1046

"The Money Rate of Interest and the Influence of Assets
in a Multistage Economy with Gold or Paper Money: Part I"

Martin Shubik and Shuntian Yao

June 1993

The role of long lived assets is considered in serving as hostages to extend the domain of trustless trade in an exchange economy. Assuming that individuals have life cycle preferences, we consider the most general set of utility functions consistent with these preferences and a stationary equilibrium for an OLG economy. The influence of the type of asset, durable or storable on the need for money is considered.