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Although some previous studies assert that the selection of a key currency is a kind of hysteresis dominated by contingencies, historical evidence suggests that this selection depends on the following two plausible and inevitable economic factors that this study examines: overwhelming industrial power and the possession of huge amounts of foreign assets and gold. Based on the fulfillment of these economic factors, the key-currency country receives rents in return for bearing the sovereign risk and supplying sufficient liquidity to the countries within its network that accept its currency. Thus, the key-currency system can be regarded as an international liquidity provision and insurance system that relies on the economic power of the key-currency country.
Employment theory does lacks a consensus concerning whether employment variation should be expressed as a change in the hours worked as a representative individual or as a change in the population of employed individuals. By appling the OLG model developed by Lucas  and Otaki ([2-4]), the present article describes a serious theoretical conesquence of distinction. The crucial factor that different employment theories are the intertemporal substitution effect and the indivisibility of labor force. Monetary expansion increases the rate of return for money if it is credible in the sense of Otaki . This enhances the hours worked in the representative individual model, and thus, aggregate supply causes demand. Conversely, in the indivisible employees model, such an intertemporal substitution effect does not exist. The monetary expansion directly improves the purchasing power of money and thereby increases the aggregate demand for goods by the older generation. Thus, demand derives supply.
We analyze whether or not money can be
circulated as a purely transaction medium in the search theory. We obtain the
following result: unless the role of a store of value added to the function of
money, money does not circulate and the economy degenerates into a barter