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Money, credit and banking

Berentsen, Aleksander and Camera, Gabriele and Waller, Christopher. (2007) Money, credit and banking. Journal of economic theory, Vol. 135, H. 1. S. 171-195.

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Official URL: http://edoc.unibas.ch/dok/A5248966

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Abstract

In monetary models where agents are subject to trading shocks there is typically an ex post inefficiency since some agents are holding idle balances while others are cash constrained. This problem creates a role for financial intermediaries, such as banks, who accept nominal deposits and make nominal loans. In general, financial intermediation improves the allocation. The gains in welfare come from the payment of interest on deposits and not from relaxing borrowers` liquidity constraints. We also demonstrate that when credit rationing occurs increasing the rate of inflation can be welfare improving. (c) 2006 Elsevier Inc. All rights reserved.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen)
UniBasel Contributors:Berentsen, Aleksander
Item Type:Article, refereed
Bibsysno:Link to catalogue
Publisher:Academic Press
ISSN:1095-7235
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:22 Mar 2012 14:28
Deposited On:22 Mar 2012 14:03

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