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Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles >
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| Title: | | An Idealized View of Financial Intermediation  |
| 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 |
| Series/Report no.: | | economics - The Open-Access, Open-Assessment E-Journal 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 |
| URL of the first edition: | | http://www.economics-ejournal.org/economics/journalarticles/2007-5 |
| Creative Commons License: | |  |
| Document Type: | | Article |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles
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