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
TypeArticle accepté pour publication ou publié
Journal nameJournal of Economic Theory
MetadataShow full item record
Author(s)Rojas Breu, Mariana
Laboratoire d'Economie de Dauphine [LEDa]
Abstract (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 / KeywordsMoney; Inflation; Debt enforcement
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