Money-hoarding as a behaviour towards uninsured idiosyncratic risks

This paper explores the implications of the presence of uninsured idiosyncr atic risks for the hoarding of intrinsically useless fiat money in an overl apping-generations model. It is shown that: (a) monetary equilibria exist i n almost all cases; (b) the valuation of money is not necessarily Pareto-im proving since the non-monetary steady state may Pareto-dominate the monetar y one; and (c) the accelerating inflation may, moreover, reduce the long-ru n capital stock.