Abstract
We relax a standard assumption on the matching technology in a search model of money. In particular, agents may remain in a long-term partnership as long as it is in their self-interest. With this simple modification, it is possible to support self-enforcing, intertemporal trade which resembles credit without a public record keeping device. We examine conditions for co-existence of currency and credit and the welfare gains/losses associated with the introduction of money.
Original language | English (US) |
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Pages (from-to) | 933-951 |
Number of pages | 19 |
Journal | Economic Theory |
Volume | 24 |
Issue number | 4 |
DOIs | |
State | Published - Nov 1 2004 |
Keywords
- Gift-giving
- Partnerships
- Search frictions