Private Money

Stephen Williamson

Working Papers from University of Iowa, Department of Economics

Abstract: A random matching environment is constructed where banks mitigate a mismatch between the timing of investment payoffs and when agents wish to consume. Claims on banks may serve as media of exchange, i.e. private money. Two problems can emerge with private money. First, there may exist welfare-dominated equilibria where banks hold low-return assets. Second, private media of exchange may be subject to lemons problems. In spite of these problems, the introduction of fiat money can decrease welfare, as this displaces private money and results in a crowding out of productive intermediation.

Keywords: money; banking & financial intermediation (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Pages: 33 Pages
Date: 1998-09
References: Add references at CitEc
Citations:

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

Related works:
Journal Article: Private money (1999)
Journal Article: Private Money (1999)
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:98-09

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 ).