We study how the degree of credit enforcement matters for the transmission of long-run inflation and the welfare effect of private-money creation. We do so in a model with directed and competitive search, where sellers borrow against their search-market income. Intermediaries sell the arising claims as private money to buyers, who use it along with fiat money to transact in the search market. Inflation stimulates borrowing by curbing real interest rates. With sophisticated enforcement, sellers

Tag-uri: Inflatie