Money and Dynamic Credit Arrangements with Private Information

S. Aiyagari and Stephen Williamson

Working Papers from University of Iowa, Department of Economics

Abstract: We construct a model with private information in which consumers write dynamic contracts with financial intermediaries. A role for money arises due to random limited participation of consumers in the financial market. Without defection constraints, a Friedman rule is optimal, the mean and variability of wealth tend to fall in the steady state, and the welfare effects of inflation are very small. With defection constraints, it is optimal to eliminate currency entirely, the variability of wealth tends to rise with inflation, and the welfare effects of inflation are large.

Keywords: Money; Credit; Private Information (search for similar items in EconPapers)
JEL-codes: D8 E5 (search for similar items in EconPapers)
Pages: 44 Pages
Date: 1997-10
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Money and Dynamic Credit Arrangements with Private Information (2000)
Working Paper: Money and dynamic credit arrangements with private information (1998)
Working Paper: Money and Dynamic Credit Arrangements with Private Information (1998)
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:uia:iowaec:97-19

Access Statistics for this paper

More papers in Working Papers from University of Iowa, Department of Economics University of Iowa, Department of Economics, Henry B. Tippie College of Business, Iowa City, Iowa 52242. Contact information at EDIRC.
Bibliographic data for series maintained by None ( this e-mail address is bad, please contact ).