Is gold an efficient store of value?
The authors prove that the higher the ratio of consumption value to service value, the more suitable is the durable commodity to be money. Let us add that a typical durable commodity has both some consumption value (utility yielded at a point of consumption when it ``disappears as a smoke'') and some service value (utility yielded on an account of its beauty (gold, jewelery) without getting dissipated. Next they show that if there is enough tobacco-like money at the beginning, then the equilibrium is efficient, under the assumption of a diminishing marginal utility to consuming tobacco, and that the marginal utility of tobacco is bounded from below. It is also demonstrated that if money is gold-like, then for every generic \(u\in U\) the allocation yield by \(u\) is not efficient.
scientific article; zbMATH DE number 1968468