On the complementarity of money and credit

Leo Ferraris ()

European Economic Review, 2010, vol. 54, issue 5, 733-741

Abstract: I propose a model where agents 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 inflation, complementarity implies that the credit to money ratio decreases with inflation.

Keywords: Coexistence; of; money; and; credit (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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