Circulating Private Debt: An Example with a Coordination Problem Public Deposited

Creator Series Issue number
  • 209
Date Created
  • 1984-05
  • We use a model of pure, intertemporal exchange with spatially and information-ally separated markets to explain the existence of private securities which circulate and, hence, play a prominent role in exchange. The model, which utilizes a perfect foresight equilibrium concept, implies that a Schelling-type coordination problem can arise. It can happen that the amounts of circulating securities that are required to support an equilibrium and that are issued at the same time in informationally separated markets must satisfy restrictions not implied by individual maximization and market clearing in each market separately.

Subject (JEL) Keyword Alternative title
  • A model of circulating private debt / Robert Townsend, Neil Wallace.
Date Modified
  • 07/11/2019
Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
  • Federal Reserve Bank of Minneapolis
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