Payments Systems with Random Matching and Private Information

Stephen Williamson

Working Papers from University of Iowa, Department of Economics

Abstract: A model of dynamic risk-sharing is constructed where agents meet pairwise and at random, and there is private information about endowments. Risk sharing is accomplished through dynamic contracts involving credit transactions, and through monetary exchange. A Friedman rule is optimal, and solutions are computed. The welfare costs of inflation and the effects of inflation on the distribution of consumptions and wealth are small for an economy calibrated to U.S. data. However, these effects are large when the credit system is relatively unsophisticated.

Keywords: Money; Payments; Credit; Private Information (search for similar items in EconPapers)
JEL-codes: D8 E5 (search for similar items in EconPapers)
Pages: 36 Pages
Date: 1997-09
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Related works:
Journal Article: Payment systems with random matching and private information (1998)
Journal Article: Payments Systems with Random Matching and Private Information (1998)
Working Paper: Payments Systems with Random Matching and Private Information (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:uia:iowaec:97-21

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