01876cas a2200265 a 4500 AALejournalIMF017381 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475572339 1018-5941 BD-DhAAL BD-DhAAL Wang, Liang. Money and Credit : Theory and Applications / Liang Wang, Randall Wright, Lucy Qian Liu. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We 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. We deliver closed-form solutions for money demand. We then show the model can simultaneously account for the price-change facts, cash-credit shares in micro payment data, and money-interest correlations in macro data. We analyze the effects of inflation on welfare, price dispersion and markups. We also describe nonstationary equilibria as self-fulfilling prophecies, which is standard, except here it entails dynamics in the price distribution. Mode of access: Internet Liu, Lucy Qian. Wright, Randall. IMF Working Papers; Working Paper ; No. 2017/014 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/014/001.2017.issue-014-en.xml IMF e-Library