Liquidity, Quality, Production Cost, and Welfare in A Search Model of Money  

Oleh:

Young, Sik Kim ; Shuntian, Yao

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 111 no. 468 (2001), page 114-127.
Topik: welfare; liquidity; quality; production cost; welfare; money
Fulltext: 114.pdf (231.35KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.3 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This paper examines a search model of money with divisible commodities of high and low quality, while keeping the assumptions of indivisible money and unit - inventory constraint. With no direct barter and a higher fixed cost of producing high relative to low quality, an increase in the money stock encourages the production of high - quality output by trading off the larger trading opportunities against the significance of higher fixed cost. As long as the fixed - cost differential between high and low quality is sufficiently small relative to the utility gain from high - quality consumption, the quality improvement outweighs the negative effect of higher money stocks on aggregate production, and hence implies higher welfare.

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