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Title:An Idealized View of Financial Intermediation PDF Logo
Authors:Sissoko, Carolyn
Issue Date:2007
Citation:[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 1 [Issue:] 2007-5 [Pages:] 1-29 [DOI/URN:] doi:10.5018/economics-ejournal.ja.2007-5
Abstract:We consider an environment where the general equilibrium assumption that every agent buys and sells simultaneously is relaxed. We show that fiat money can implement a Pareto optimal allocation only if taxes are type-specific. We then consider intermediated money by assuming that financial intermediaries whose liabilities circulate as money have an important identifying characteristic: they are widely viewed as default-free. The paper demonstrates that default-free intermediaries who issue deposit accounts with credit lines to consumers can resolve the monetary problem and make it possible for the economy to reach a Pareto optimum.
Subjects:Fiat Money
Cash-in-advance
Financial Intermediation
JEL:E5
G2
Persistent Identifier of the first edition:doi:10.5018/economics-ejournal.ja.2007-5
Creative Commons License:http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type:Article
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles

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