THE IMPORTANCE OF THE MONEY CREDIT SYSTEM IN THE WORLD

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Kuchkarov Gaybulla
Lola Babayeva

Abstract

In this article we try to develop a theory of money and credit as competing payment instruments, then put it to work in applications. Buyers can use cash or credit, with the former (latter) subject to the inflation tax (transaction costs). Frictions that make the choice of payment method interesting also imply equilibrium price dispersion.

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