On the complementarity of money and credit
AbstractI propose a model where agents choose to conduct their business using two payment instruments, money and bilateral credit. A friction in the timing of transactions rationalizes the use of both instruments and makes it optimal for agents to use money as a means of settlement for credit. Money and credit complement each other. With anticipated inflation, complementarity implies that the credit to money ratio decreases with inflation.
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Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 54 (2010)
Issue (Month): 5 (July)
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Coexistence of money and credit;
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