Production, hidden action, and the payment system

Chao Gu, Mark Guzman and Joseph Haslag

Journal of Monetary Economics, 2011, vol. 58, issue 2, 172-182

Abstract: Using a modified version of Freeman's (1996) payment system model, the optimal intraday rate is examined. The production set is modified to account for a non-degenerate distribution of settlements within a day. In addition to the modified production set, the consumption set is modified. A positive intraday interest rate may be able to implement the planner's allocation.

Date: 2011
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Working Paper: Production, Hidden Action, and the Payment System (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:58:y:2011:i:2:p:172-182

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