Payment Systems

Posted: 10 Jan 2012

See all articles by James McAndrews

James McAndrews

Federal Reserve Bank of New York

Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Guillaume Rocheteau

University of California, Irvine; Federal Reserve Banks - Federal Reserve Bank of Cleveland

Date Written: December 2011

Abstract

Modern payment instruments can be complex. Yet, many of these can be interpreted as a form of money or credit, which are rather primitive instruments. We use a simple model of a monetary economy to provide an overview of some of the fundamental questions in the literature on payments. Why do agents pay? What are the frictions that prevent or limit the use of credit arrangements? Why is fiat money valued? Why do money and credit coexist? Our simple model can address these basic and important questions, and can be extended to address a variety of issues related to payments.

Suggested Citation

McAndrews, James and Nosal, Ed and Rocheteau, Guillaume, Payment Systems (December 2011). Annual Review of Financial Economics, Vol. 3, pp. 259-287, 2011. Available at SSRN: https://ssrn.com/abstract=1981860 or http://dx.doi.org/10.1146/annurev-financial-102710-144903

James McAndrews (Contact Author)

Federal Reserve Bank of New York ( email )

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Ed Nosal

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

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Guillaume Rocheteau

University of California, Irvine ( email )

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Irvine, CA 62697-3125
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Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

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