Optimality of Exchange Credit Restrictions

Max Gillman ()

No 519, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: The paper formalizes a conflict in the use of credit. As compared to using costless fiat, the consumer's use of credit wastes resources by avoiding the inflation tax through a costly means of exchange. This inefficiency gives lattitude for a planner to increase welfare by restricting exchange credit.

Keywords: CREDIT; INFLATION; TAXES; TAXATION (search for similar items in EconPapers)
JEL-codes: E30 E31 E39 H20 (search for similar items in EconPapers)
Date: 1996

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Persistent link: http://EconPapers.repec.org/RePEc:mlb:wpaper:519

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