Money and Costly Credit

Mei Dong ()

No 404, 2009 Meeting Papers from Society for Economic Dynamics

Abstract: evidence. Compared to an economy without credit, allowing credit as a means of payment has three implications: [1] it lowers money demand at low to moderate inflation rates; [2] it improves society's welfare when the inflation rate exceeds a specific threshold; and [3] it can raise the welfare cost of inflation for some reasonable values of the credit cost parameter.

Date: 2009
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Working Paper: Money and Costly Credit (2011)
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