This paper presents a microfounded model of money where durable assets serve as a guarantee to repay consumption loans. We study a steady state equilibrium where money and credit coexist. In such an equi- librium, a larger investment in durable capital relaxes the borrowing constraint faced by consumers. We show that the occurrence of over-investment and the behavior of capital accumulation depend on the rate of inflation, the relative risk aversion of agents and the marginal productivity of the capital goods.

Ferraris, L., Watanabe, M. (2008). Collateral secured loans in a monetary economy. JOURNAL OF ECONOMIC THEORY, 143(1), 405-424 [10.1016/j.jet.2008.02.002].

Collateral secured loans in a monetary economy

FERRARIS, LEO;
2008-01-01

Abstract

This paper presents a microfounded model of money where durable assets serve as a guarantee to repay consumption loans. We study a steady state equilibrium where money and credit coexist. In such an equi- librium, a larger investment in durable capital relaxes the borrowing constraint faced by consumers. We show that the occurrence of over-investment and the behavior of capital accumulation depend on the rate of inflation, the relative risk aversion of agents and the marginal productivity of the capital goods.
2008
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
English
Con Impact Factor ISI
Collateral; Money; Search
Ferraris, L., Watanabe, M. (2008). Collateral secured loans in a monetary economy. JOURNAL OF ECONOMIC THEORY, 143(1), 405-424 [10.1016/j.jet.2008.02.002].
Ferraris, L; Watanabe, M
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/116514
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