Intermediary cost and coexistence puzzle

Young Sik Kim; Manjong Lee

doi:10.1016/j.econlet.2012.04.103

Intermediary cost and coexistence puzzle

Young Sik Kim, Manjong Lee

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

Abstract

The coexistence puzzle is explained via an interaction between intermediary cost and uncertainty with regards to consumption trade. If a trade opportunity as a buyer is more likely to arise, ex-ante net return on bond at the margin would be negative up to a certain amount of transactions and, therefore, agents are willing to hold money in the presence of an interest-bearing bond.

Original language	English
Pages (from-to)	142-145
Number of pages	4
Journal	Economics Letters
Volume	117
Issue number	1
DOIs	https://doi.org/10.1016/j.econlet.2012.04.103
Publication status	Published - 2012 Oct

Bibliographical note

Funding Information:
We are grateful to an anonymous referee for the valuable comments and suggestions. Manjong Lee acknowledges the financial support from the National Research Foundation of Korea ( NRF-2011-330-B00055 ). The usual disclaimer applies.

Keywords

Coexistence puzzle
Interest-bearing asset
Intermediary cost

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2012.04.103

Cite this

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author = "Kim, {Young Sik} and Manjong Lee",

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AB - The coexistence puzzle is explained via an interaction between intermediary cost and uncertainty with regards to consumption trade. If a trade opportunity as a buyer is more likely to arise, ex-ante net return on bond at the margin would be negative up to a certain amount of transactions and, therefore, agents are willing to hold money in the presence of an interest-bearing bond.

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KW - Interest-bearing asset

KW - Intermediary cost

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Intermediary cost and coexistence puzzle

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

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