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.
Berentsen, A., Camera, G., Waller, C. (2007). Money, credit and banking. JOURNAL OF ECONOMIC THEORY, 135(1), 171-195 [10.1016/j.jet.2006.03.016].
Money, credit and banking
Camera, Gabriele;
2007
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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
