Money and Credit: Theory and Applications∗
نویسندگان
چکیده
We develop a theory of money and credit as competing payment instruments, then put it to work in applications. Buyers can use cash or credit, with the former (latter) subject to the inflation tax (transaction costs). Frictions making the choice of payment method interesting also imply equilibrium price dispersion, and together these deliver closed-form solutions for money demand. The model can simultaneously account for the price-change facts, share of credit in micro data, and money-interest correlations in macro data. We also analyze the effects of inflation on welfare, price dispersion, markups and participation, and describe nonstationary equilibria as selffulfilling prophecies. JEL classification: E31, E51, E52, E42
منابع مشابه
The Relationship Between the Facility Interest Rate and Three Main Variable of the Money Market In Iran (1986-2017)
The bank interest rate is one of the most important macroeconomic variable in each country economic. The purpose of this paper is find the relationship between the facility interest rate and three main variable of the money market.In Iran. this issue for equations the interest rate facility, the interest rate of deposit, inflation and credit risk utilizing the model simultaneous equation system...
متن کاملLimited Commitment, Money, and Credit
This paper studies limited commitment and adverse selection in an economy in which private liabilities (inside money) can be used as instruments of intertemporal trade. The results suggest that in conjunction with adverse selection, the limited commitment problem may affect the behavior of intrinsically higher quality debtors more severely than lower quality ones. Nonetheless, a credit economy ...
متن کاملMoney Is Privacy
An extensive literature in monetary theory has emphasized the role of money as a recordkeeping device. Money assumes this role in situations where using credit would be too costly, and some might argue that this role will diminish as the cost of information, and thus the cost of credit-based transactions, continues to fall. In this paper we investigate another use for money: the provision of pr...
متن کاملCredit rationing with symmetric information
Without denying the importance of asymmetric information, this article purports the view that credit rationing may also originate from a lender’s inability to classify loan applications into proper risk categories. Although particularly prominent when novel technologies or novel institutional arrangements arise, lack of appropriate categories may affect any request of money lending, making cred...
متن کاملOn the Complementarity of Money and Credit
I propose a model where agents optimally choose to conduct their business using two payment instruments, money and bilateral credit. A friction in the timing of transactions rationalizes the use of both instruments and makes it optimal for agents to use money as a means of settlement for credit. Money and credit complement each other. With anticipated ination, complementarity implies that the ...
متن کامل