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Intermediary Cost and Coexistence Puzzle

Author

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  • Young Sik Kim

    () (Department of Economics Seoul National University, Seoul, South Korea)

  • Manjong Lee

    () (Department of Economics, Korea University, Seoul, South Korea)

Abstract

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

Suggested Citation

  • Young Sik Kim & Manjong Lee, 2011. "Intermediary Cost and Coexistence Puzzle," Discussion Paper Series 1103, Institute of Economic Research, Korea University.
  • Handle: RePEc:iek:wpaper:1103
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    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1103.pdf
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    References listed on IDEAS

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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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