nflation tax and money essentiality

This paper shows that [Journal of Political Economy 91 (1983) 675] infeasibility condition, which is equivalent to say that money is essential, is an empirical question, rather than a theoretical issue. This hypothesis can be tested by using inflation tax data from hyperinflation experiments. Furthermore, we show that even when there is a foreign currency being used as a means of payments, the domestic currency is still essential as long as the elasticity of substitution between the two currencies is less than or equal to one.