monetary policy.Chapter 1 studies the choice of endogenous means of payment when holding money is risky. In steady state … interest rate. Credit may be used when the return on money is not positive. A positive money injection reduces the crime rate … households exchange money for interest-bearing government nominal bonds in the asset market. The government injects money through …

The paper functionally describes the income velocity of money by including the cost of a key substitute to money …: exchange credit. Financial innovation causes the cost of credit to fall, the quantity of money demanded to fall, and the … velocity to rise, all without shifting the money demand function. The paper derives a general equilibrium money demand function …

constent with the idea that time can substitute for money in the provision of transaction services. The estimates are … consistent with both scale economies in the holding of money and secular declines in velocity. …