Another Example of a Credit System that Co‐Exists with Money

Gabriele Camera and Yiting Li

Journal of Money, Credit and Banking, 2008, vol. 40, issue 6, 1295-1308

Abstract: We study an economy in which exchange occurs pairwise, there is no commitment, and anonymous agents choose between random monetary trade or deterministic credit trade. To accomplish the latter, agents can exploit a costly technology that allows limited record‐keeping, and enforcement. An equilibrium with money and credit is shown to exist if the cost of using the technology is sufficiently small. Anonymity, record‐keeping, and enforcement limitations also permit some incidence of default, in equilibrium.

Date: 2008
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https://doi.org/10.1111/j.1538-4616.2008.00158.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:40:y:2008:i:6:p:1295-1308

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