Discussion Paper

No. 2007-16 | April 11, 2007
An Idealized View of Financial Intermediation


Using the monetary model developed in Sissoko (2007), where the general equilibrium assumption that every agent buys and sells simultaneously is relaxed, we observe that in this environment fiat money can implement a Pareto optimum only if taxes are type-specific. We then consider intermediated money by assuming that financial intermediaries whose liabilities circulate as money have an important identifying characteristic: they are widely viewed as default-free. The paper demonstrates that default-free intermediaries who issue credit lines to consumers can resolve the monetary problem and make it possible for the economy to reach a Pareto optimum. We argue that our idealized concept of financial intermediation is a starting point for studying the monetary use of credit

JEL Classification:

E5, G2


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Cite As

Carolyn Sissoko (2007). An Idealized View of Financial Intermediation. Economics Discussion Papers, No 2007-16, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2007-16

Comments and Questions

anonymous - Referee Report
May 16, 2007 - 09:40

see attached file

Carolyn Sissoko - Response to referee 1
May 21, 2007 - 18:47

I have attached the response to the referee.

anonymous - Referee Report
May 16, 2007 - 09:41

see attached file

Carolyn Sissoko - Response to referee 2
May 21, 2007 - 18:48

I have attached the reponse to the referee.

Carolyn Sissoko - Revision of Paper
May 22, 2007 - 18:06

Here's the revision of the paper.

anonymous - Report of Referee 1 on revised paper
June 05, 2007 - 08:56

see attached file

Carolyn Sissoko - Reply to Referee
June 21, 2007 - 23:00

See attached document.

Carolyn Sissoko - Updated revision of paper
May 30, 2007 - 23:05

This draft has some corrections in section 3.

Carolyn Sissoko - Update Revision
June 21, 2007 - 23:41

See attached file.