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On the Local Interaction of Money and Credit

  • Yi Jin

    (University of Kansas)

  • Ted Temzelides

    (University of Pittsburgh)

We study the coexistence of monetary and credit transactions in a model where exchange is decentralized. Agents belong to different locations which are informationally separated. The equilibrium mix of monetary and credit transactions is characterized as a function of the frequency of meetings among agents from different locations, Credit transactions take place only among a small set of 'neighbors.' Monetary trades emerge only if interactions with faraway locations are sufficiently frequent. Even in that case, trades among nearby locations remain non-monetized. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/S1094-2025(03)00055-3
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 7 (2004)
Issue (Month): 1 (January)
Pages: 143-156

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Handle: RePEc:red:issued:v:7:y:2004:i:1:p:143-156
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