Money and credit coexistence, excess capacity, and the size of monetary aggregates
Money and credit coexistence, excess capacity, and the size of monetary aggregates
This paper develops a model where money is demanded in excess of spending needs. As a result, money coexists with large availabilities of credit and the model explains the levels of monetary aggregates held in modern economies via the endogenous creation of inside money. At the heart of the model, there is a search friction in the goods market, which generates spare production and spending capacity. As a consequence, there is an endogenous productivity wedge, due to spare production capacity, and an endogenous money velocity, due to spare spending capacity.
477-513
Mennuni, Alessandro
18a3b238-2d5b-4219-8d50-7c87765007a4
Mennuni, Alessandro
18a3b238-2d5b-4219-8d50-7c87765007a4
Mennuni, Alessandro
(2023)
Money and credit coexistence, excess capacity, and the size of monetary aggregates.
Journal of Money, Credit & Banking, 57 (2-3), .
(doi:10.1111/jmcb.13106).
Abstract
This paper develops a model where money is demanded in excess of spending needs. As a result, money coexists with large availabilities of credit and the model explains the levels of monetary aggregates held in modern economies via the endogenous creation of inside money. At the heart of the model, there is a search friction in the goods market, which generates spare production and spending capacity. As a consequence, there is an endogenous productivity wedge, due to spare production capacity, and an endogenous money velocity, due to spare spending capacity.
Text
Coexistence_Money_Credit_JMCB
- Accepted Manuscript
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Accepted/In Press date: 20 July 2023
e-pub ahead of print date: 3 November 2023
Identifiers
Local EPrints ID: 483381
URI: http://eprints.soton.ac.uk/id/eprint/483381
ISSN: 0022-2879
PURE UUID: 5e0472f2-6521-40cb-9335-326deecd9a13
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Date deposited: 30 Oct 2023 12:24
Last modified: 02 Sep 2025 04:01
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Author:
Alessandro Mennuni
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