Money and credit remix

Resumo

Gu, Mattesini, and Wright (2016) show that credit is irrelevant in a monetary economy with permanent buyer and seller types. In particular, the size of debt limits do not matter for the determination of real allocations. We revisit their irrelevance result in a monetary economy with random types, as in Lagos and Wright (2005). The presence of random types creates a misallocation of liquidity that can be redressed with the use of monetary loans. In these circumstances, credit is not irrelevant and the size of debt limits matter for the determination of real allocations. We use the model to examine the implications of conventional and unconventional policy interventions.

Ficha do documento

Tipo

Outro

Ano

2018

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/27661

Temas

Economia

Palavras-chave

MoneyCreditEssentialityMonetary policyEconomiaFinançasPolítica monetáriaCréditosComércio