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Tekijä:Kim, Y. S.
Yao, S.
Otsikko:Liquidity, quality, production cost, and welfare in a search model of money
Lehti:Economic Journal
2001 : JAN, VOL. 111:468, p. 114-127
Asiasana:LIQUIDITY CONSTRAINTS
QUALITY
PRODUCTION
PRODUCTION COSTS
WELFARE
MONEY
Kieli:eng
Tiivistelmä: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.
SCIMA tietueen numero: 228251
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