Societal benefits of illiquid bonds
نویسنده
چکیده
In this paper, I provide a possible explanation of why nominally risk-free bonds are essential in monetary economies. I argue that the role of nominal bonds is to enable agents to engage in intertemporal exchanges of money. I show that bonds can only serve this role if they are illiquid (costly to exchange for goods). Finally, I argue that in economies in which nominal bonds are essential, it is optimal for monetary policy to respond to changes in the distribution of liquidity needs. r 2003 Elsevier Science (USA). All rights reserved. JEL classification: E40; E51; D82
منابع مشابه
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ورودعنوان ژورنال:
- J. Economic Theory
دوره 108 شماره
صفحات -
تاریخ انتشار 2003