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Intermediary cost and coexistence puzzle

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  • Kim, Young Sik
  • Lee, Manjong

Abstract

The coexistence puzzle is explained via an interaction between intermediary cost and uncertainty with regards to consumption trade. If a 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 transactions and, therefore, agents are willing to hold money in the presence of an interest-bearing bond.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 117 (2012)
Issue (Month): 1 ()
Pages: 142-145

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Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:142-145

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Intermediary cost; Interest-bearing asset; Coexistence puzzle;

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Cited by:
  1. Lee, Manjong, 2013. "Coexistence and welfare cost of inflation," Journal of Macroeconomics, Elsevier, vol. 36(C), pages 23-32.

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