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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.

Suggested Citation

  • Kim, Young Sik & Lee, Manjong, 2012. "Intermediary cost and coexistence puzzle," Economics Letters, Elsevier, vol. 117(1), pages 142-145.
  • Handle: RePEc:eee:ecolet:v:117:y:2012:i:1:p:142-145
    DOI: 10.1016/j.econlet.2012.04.103
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    Cited by:

    1. Maciejczak, Mariusz, 2015. "Will the institution of coexistence be re-defined by TTIP?," GMCC-15: Seventh GMCC, November 17-20, 2015, Amsterdam, the Netherlands 211478, International Conference on Coexistence between Genetically Modified (GM) and non-GM based Agricultural Supply Chains (GMCC).
    2. Lee, Manjong, 2013. "Coexistence and welfare cost of inflation," Journal of Macroeconomics, Elsevier, vol. 36(C), pages 23-32.

    More about this item

    Keywords

    Intermediary cost; Interest-bearing asset; Coexistence puzzle;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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