Debt enforcement and the value of money
Rojas Breu, Mariana (2017), Debt enforcement and the value of money, Journal of Economic Theory, 168, p. 237-251. 10.1016/j.jet.2016.12.010
Type
Article accepté pour publication ou publiéDate
2017Journal name
Journal of Economic TheoryVolume
168Publisher
Academic Press
Pages
237-251
Publication identifier
Metadata
Show full item recordAbstract (EN)
This paper presents a framework in which fiat money has value in equilibrium even though a risk-free higher-return asset can be equally used as a medium of exchange. In a limited-commitment environment, agents may prefer to borrow a low-return asset because that results in a larger borrowing capacity. Thus, a monetary equilibrium in which money is dominated in rate of return exists.Subjects / Keywords
Money; Inflation; Debt enforcementRelated items
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