Reed, Robert R.; Waller, Christopher J. - In: Journal of Money, Credit and Banking 38 (2006) 6, pp. 1599-1618
We study the use of money for sharing consumption risk. In our model, agents randomly receive endowments at some points in time and produce at other points. Due to information frictions, agents cannot use intertemporal contracts to share risk. The use of money allows agents to overcome these...