Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18003
Year of Publication: 
2007
Citation: 
[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [ISSN:] 1864-6042 [Volume:] 1 [Issue:] 2007-5 [Publisher:] Kiel Institute for the World Economy (IfW) [Place:] Kiel [Year:] 2007 [Pages:] 1-29
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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