Transferability, finality, and debt settlement

• 成果类型: Article
• 署名作者: Kahn, Charles M.; Roberds, William
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Atlanta; University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2006.06.005
• 发表日期: 2007
• 页码: 955-978
• 关键词: SETTLEMENT; transferability; finality; negotiability; mechanism design; Inside money

摘要

Payment, fundamental to exchange in a decentralized economy, often takes the form of transfers of inside money, i.e., specialized forms of debt. Associated with each type of inside money is a set of rules that governs both the legitimacy of such transfers as means of extinguishing other debts, and the allocation of the ensuing risks. In this paper we develop a model of debt as inside money. In a simple mechanism design framework we show that transferable debt that can be used to settle other debt obligations with finality can be a welfare improving arrangement in the presence of limited enforcement powers. Transferable debt has two advantages over simple chains of credit: it allows for removal of less-than-perfectly reliable agents from the chain in a timely fashion, and it allows agents to direct payments to the proper party without direct communication with other members of the credit chain. (C) 2006 Elsevier B.V. All rights reserved.