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The welfare effect of access to credit

Rojas Breu, Mariana (2013), The welfare effect of access to credit, Economic Inquiry, 51, 1, p. 235-247. http://dx.doi.org/10.1111/j.1465-7295.2011.00416.x

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Type
Article accepté pour publication ou publié
Date
2013
Journal name
Economic Inquiry
Volume
51
Number
1
Publisher
Western Economic Association International etc.
Pages
235-247
Publication identifier
Metadata
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Author(s)
Rojas Breu, Mariana
Abstract (EN)
I present a model in which credit and outside money can be used as means of payment in order to analyze how access to credit affects welfare when credit marketsfeature limited participation. Allowing more agents to use credit has an ambiguous effect on welfare because it may make consumption-risk sharing more inefficient. I calibrate the model using U.S. data on credit-card transactions and show that the increase in access to credit from 1990 to the near present has had a slightly negative impact on welfare.
Subjects / Keywords
credit; risk sharing; Money; limited participation
JEL
E41 - Demand for Money
E51 - Money Supply; Credit; Money Multipliers