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The welfare cost of inflation in a cash-in-advance economy with costly credit

Article Abstract:

A study was conducted to examine an extension of the cash-in-advance economic model. The model describes how a consumer decides to buy certain goods with either cash or costly credit given information on relative price markets. Results show that margins of substitution condition inflation's welfare cost. In addition, consumers will try to avoid inflation by applying credit terms which generate greater welfare costs.

Economic aspects, Inflation (Finance), Inflation (Economics)

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Welfare-improving credit controls

Article Abstract:

An analysis of credit controls is presented. The analysis follows earlier findingswhich conclude that such controls lead to inefficient resource allocation. It is shown that the opposite case holds true. The current result is validated by a general equilibrium, multi-good model where spatial separation is a factor and where cash and trade credit are variables of exchange in a steady state condition.

Monetary policy

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Dynamic credit relationships in general equilibrium

Article Abstract:

Effect of dynamic contracts on asymmetric information is studied with the use of a general equilibrium model.

United States, Analysis, Commercial credit, Management contracts, Information asymmetry

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