Private and public circulating liabilities

Article Abstract:

The existence and multiplicity of equilibria is reported and the dynamics os steady states are characterized with regard to private banknote and the circulation of private liabilities.

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Adverse selection in the overlapping generations model: the case of pure exchange

Article Abstract:

The general equilibrium consequences of credit rationing resulting from static incentive problems is examined, and policies supporting constrained optimality properties are described. A pure exchange overlapping generations economic model is studied, with an added adverse selection problem in financial markets. Deficit financing and related welfare issues, including the consequences of credit rationing, are considered. Results are contrasted with those obtained under exogenously imposed credit restrictions.

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Intermediaries and payments instruments

Article Abstract:

In an economy where intermediaries have incentives to issue circulating liabilities as part of an equilibrium, it can be shown that with arbitrarily small transactions costs, only the liabilities of intermediaries will circulate. Thus, the given model connects intermediation activity with the issuance of payments media, a connection that hasn't been made in earlier literature and the model is used to suggest a resolution of the 'banknote underissue puzzle' of Cagan.

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