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On the local interaction of money and credit
Jin, Yi Temzelides, Ted
Jin, Yi
Temzelides, Ted
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Abstract
We study the coexistence of monetary and credit transactions in a model where exchange is decentralized. Agents belong to different locations which are informationally separated. The equilibrium mix of monetary and credit transactions is characterized as a function of the frequency of meetings among agents from different locations. Credit transactions take place only among a small set of "neighbors." Monetary trades emerge only if interactions with faraway locations are sufficiently frequent. Even in that case, trades among nearby locations remain non-monetized. (C) 2003 Elsevier Inc. All rights reserved.
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Date
2004-01
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ACADEMIC PRESS INC ELSEVIER SCIENCE
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Keywords
Money and credit, Local matching
Citation
Jin, Y; Temzelides, T. On the local interaction of money and credit. REVIEW OF ECONOMIC DYNAMICS. January 2004. 7(1):143-156