onetary Economics at 30: A Reexamination of the Relevance of Money in Cashless Limiting Monetary Economies

Ricardo Lagos

No 34155, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The well-known cashless-limiting result in Woodford (1998) has become the theoretical foundation for a large body of work that treats the costs and benefits of holding money as irrelevant for monetary transmission. I reexamine this result and find that it relies on a peculiar credit-market structure consisting of perfectly competitive, zero-interest deferred payment arrangements. I show that the result breaks down when the microstructure is generalized to allow for an endogenous interest rate and market power in credit intermediation. The tenuousness of this influential result should give pause to the widespread practice of basing monetary policy advice on models without money.

JEL-codes: E5 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34155.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34155

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34155
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().