Arbeitspapier
Welfare-improving debt constraints
We show that in economies without liquidity frictions, but with incomplete financial markets, when agents are infinitely lived and uniformly impatient, money can still be essential (that is, have a positive price in equilibrium) if and only if each agent has binding debt constraints at some node of her life span. That is, contrary to what might be expected, in the absence of a very productive financial market, frictions induced by debt constraints create some room for improving efficiency, by allowing money to have a role in transferring wealth across dates and states of nature.
- Language
-
Englisch
- Bibliographic citation
-
Series: Texto para discussão ; No. 541
- Classification
-
Wirtschaft
General Equilibrium and Disequilibrium: General
Incomplete Markets
- Subject
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Cashless economies
Binding debt constraints
Fundamental value of money.
- Event
-
Geistige Schöpfung
- (who)
-
Páscoa, Mário R.
Petrassi, Myrian
Torres-Martínez, Juan Pablo
- Event
-
Veröffentlichung
- (who)
-
Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia
- (where)
-
Rio de Janeiro
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Páscoa, Mário R.
- Petrassi, Myrian
- Torres-Martínez, Juan Pablo
- Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia
Time of origin
- 2007
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