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The joint services of money and credit

William Barnett ()

MPRA Paper from University Library of Munich, Germany

Abstract: While credit cards provide transaction services, as do currency and demand deposits, credit cards have never been included in measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities, such as credit card balances, to assets, such as money. But economic aggregation theory and index number theory are based on microeconomic theory, not accounting, and measure service flows. We derive theory needed to measure the joint services of credit cards and money. In the transmission mechanism of central bank policy, these results raise potentially fundamental questions about the traditional dichotomy between money and some forms of short term credit, such as checkable lines of credit. We do not explore those deeper issues in this paper, which focuses on measurement.

Keywords: credit cards; money; credit; aggregation theory; index number theory; Divisia index; risk; asset pricing. (search for similar items in EconPapers)
JEL-codes: C43 E01 E3 E40 E41 E51 E52 E58 (search for similar items in EconPapers)
Date: 2014-12-01
New Economics Papers: this item is included in nep-acc, nep-ban, nep-mac and nep-mon
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https://mpra.ub.uni-muenchen.de/60336/1/MPRA_paper_60336.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/60506/9/MPRA_paper_60506.pdf revised version (application/pdf)

Related works:
Working Paper: The Joint Services of Money and Credit (2014) Downloads
Working Paper: The Joint Services of Money and Credit (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:60336

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