Co-essentiality of money and credit: A mechanism-design view

• 成果类型: Article
• 署名作者: van Buggenum, Hugo; Rabinovich, Stanislav
• 署名单位: Swiss Federal Institutes of Technology Domain; ETH Zurich; University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2023.105734
• 发表日期: 2023
• 关键词: money; credit; search; essentiality; mechanism design

摘要

Under what conditions are money and credit jointly essential for trade? We answer this question by apply-ing a mechanism-design approach to a standard monetary search model, augmented with two types of credit technologies. First, payment can be enforced up to some exogenous amount (enforcement-based credit). Second, default on past promises can be partially monitored by future trading partners (monitoring-based credit). We characterize implementable allocations subject to individual rationality and bilateral efficiency of trades. Consistent with prior literature, we find that money and monitoring-based credit cannot be jointly essential. However, we show that money and enforcement-based credit are jointly essential as long as nei-ther payment instrument by itself is sufficient to implement a first-best. Money is memory, but it is not enforcement. (c) 2023 Elsevier Inc. All rights reserved.