Suppose the inter mediation of capital goods costs units of the consumption good for each unit
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Suppose the inter mediation of capital goods costs ϕ units of the consumption good for each unit of capital intermediated (ϕ < X0.5). Assume that transaction costs occur when agents withdraw from banks (when they are middle-aged). What will the equilibrium rate of return offered by intermediaries be if they are the ones who bear the transaction costs? For what value of ϕ, X, z, and n will fiat money be valued in this economy?
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Related Book For
Modeling Monetary Economies
ISBN: 978-1107145221
4th Edition
Authors: Bruce Champ, Scott Freeman, Joseph Haslag
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