Intermediary Cost and Coexistence Puzzle
Young Sik Kim () and
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Young Sik Kim: Department of Economics Seoul National University, Seoul, South Korea
No 1103, Discussion Paper Series from Institute of Economic Research, Korea University
The coexistence puzzle is explained via an interaction between intermediary cost and uncertainty on consumption trade. If the trade opportunity as a buyer is more likely to arise, ex-ante net return on bond at the margin would be negative up to a certain amount of transaction and, therefore, agents are willing to hold money in the presence of interest-bearing bond.
Keywords: intermediary cost; interest-bearing asset; coexistence puzzle (search for similar items in EconPapers)
JEL-codes: E40 E42 (search for similar items in EconPapers)
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Journal Article: Intermediary cost and coexistence puzzle (2012)
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