On the Local Interaction of Money and Credit

Yi Jin () and Ted Temzelides ()
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Ted Temzelides: University of Iowa

Working Papers from University of Iowa, Department of Economics

Abstract: We study the emergence and coexistence of monetary and credit transactions in a model where exchange is decentralized. Agents belong to different villages which are informationally separated. The frequency of meetings between any two different villages decreases as their respective geographic distance from one another increases. The equilibrium mix of monetary and credit transactions is characterized as a function of the frequency of meetings among agents from different villages. Our economy may be interpreted as a medieval economy. Trade takes place only amoung a small set of nearby villages via the use of credit. Monetary trades emerge only after interactions with faraway villages become sufficiently frequent. Even in that case, trades among nearby villages remain non-monetized.

JEL-codes: E4 E5 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1998-10
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Related works:
Journal Article: On the Local Interaction of Money and Credit (2004)
Working Paper: On the Local Interaction of Money and Credit (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:uia:iowaec:99-05

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