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Decentralized credit and monetary exchange without public record keeping

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  • Dean Corbae

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  • Joseph Ritter

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Abstract

We relax a standard assumption on the matching technology in a search model of money. In particular, agents may remain in a long-term partnership as long as it is in their self-interest. With this simple modification, it is possible to support self-enforcing, intertemporal trade which resembles credit without a public record keeping device. We examine conditions for co-existence of currency and credit and the welfare gains/losses associated with the introduction of money. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Dean Corbae & Joseph Ritter, 2004. "Decentralized credit and monetary exchange without public record keeping," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(4), pages 933-951, November.
  • Handle: RePEc:spr:joecth:v:24:y:2004:i:4:p:933-951
    DOI: 10.1007/s00199-003-0418-8
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    Citations

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    Cited by:

    1. Vincent Bignon & Régis Breton & Mariana Rojas Breu, 2015. "Monetary Union with a Single Currency and Imperfect Credit Market Integration," FIW Working Paper series 153, FIW.
    2. Kahn, Charles M. & Roberds, William, 2008. "Credit and identity theft," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 251-264, March.
    3. Bignon, V. & Breton, R. & Rojas Breu, M., 2013. "Currency Union with and without Banking Union," Working papers 450, Banque de France.
    4. Ohik Kwon & Manjong Lee, 2016. "Credit Market Frictions and Coessentiality of Money and Credit," Discussion Paper Series 1602, Institute of Economic Research, Korea University.
    5. Antoine Martin & Michael Orlando & David Skeie, 2008. "Payment networks in a search model of money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 104-132, January.
    6. Pingle, Mark & Mukhopadhyay, Sankar, 2010. "Private money as a competing medium of exchange," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 541-554, June.
    7. Françoise Vasselin, 2018. "The Competition Between Cash and Mobile Payments in Markets with Mobile Partnerships A Monetary Search Model Point of View," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01722404, HAL.
    8. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
    9. Cyril Monnet & William Roberds, 2006. "Credit and the no-surcharge rule," FRB Atlanta Working Paper 2006-25, Federal Reserve Bank of Atlanta.
    10. Cyril Monnet & William Roberds, 2007. "Optimal pricing of payment services when cash is an alternative," Working Papers 07-26, Federal Reserve Bank of Philadelphia.
    11. Thomas Wiseman, 2015. "A Note on the Essentiality of Money under Limited Memory," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 881-893, October.
    12. Russell Wong & Cathy Zhang & Guillaume Rocheteau, 2017. "Lending Relationships, Banking Crises and Optimal Monetary Policies," 2017 Meeting Papers 152, Society for Economic Dynamics.
    13. Ed Nosal & Guillaume Rocheteau, 2006. "The economics of payments," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Feb.
    14. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
    15. Shouyong Shi, 2006. "A Microfoundation of Monetary Economics," Working Papers tecipa-211, University of Toronto, Department of Economics.
    16. repec:dau:papers:123456789/12105 is not listed on IDEAS

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    Keywords

    Search frictions; Partnerships; Gift-giving.;

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