The role of money in a less developed country

  • Subrata Ghatak


The introduction of money in a barter economy is regarded as a very important phenomenon for several reasons. In a barter economy, goods are usually exchanged against goods. But to facilitate exchanges of goods among their producers, it is necessary to have ‘a double coincidence of wants’. For instance, a man from the plains may wish to exchange some cloth against some wood; if a man from the hills brings some wood which he wants to exchange against cloth in a common market at a mutually agreeable time and if the amount of cloth and wood to be exchanged are acceptable to both the parties, then exchange would take place. Such a barter system may operate in many villages of less developed countries (LDCs). But the defects of such a system are well known


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Friedman, M. (1964) ‘Post–War Trends in Monetary Theory and Policy’, National Banking Review, 2 (1), SeptemberGoogle Scholar
  2. Friedman, M. and Schwartz, A. (1969) ‘The Definition of Money’, Journal of Money, Credit and Banking, 1 (1), 1–14CrossRefGoogle Scholar
  3. Laidler, D. (1969) ‘The Definition of Money: Theoretical and Empirical Problems’, Journal of Money, Credit and Banking, 1, 508–25CrossRefGoogle Scholar
  4. Morgan, V. E. (1969) ‘The Essential Qualities of Money’, The Manchester School of Economic & Social Studies, 37 (3), 237–48CrossRefGoogle Scholar
  5. Newlyn, I. W. and Bootley, P. R. (1978) Theory of Money, 3rd edn, Clarendon, OxfordGoogle Scholar
  6. Pesek, B. and Saving, T. (1968) The Foundation of Money and Banking, Collier, Macmillan, New YorkGoogle Scholar
  7. Pierce, G. D. and Shaw, M. D. (1977) Monetary Economics, Butterworths, LondonGoogle Scholar
  8. Lord Radcliffe (1959) Report of the Committee on the Working of the Monetary System, Cmnd 827, HMSO, LondonGoogle Scholar
  9. Yeager, B. L. (1968) ‘Essential Properties of the Medium of Exchange’, Kyklos, 21 (1), 45–68CrossRefGoogle Scholar

Copyright information

© Subrata Ghatak 1995

Authors and Affiliations

  • Subrata Ghatak
    • 1
  1. 1.University of LeicesterUK

Personalised recommendations