Choice of payment method affects inflation: Bank of Canada paper:
A Bank of Canada paper published on Tuesday examines how the introduction of credit affects money demand, social welfare and the effects of monetary policy.
Mei Dong, the paper's author, constructs a model in which money and credit co-exist as means of payment whereby money is the means of settlement, to examine how the use of credit affects money demand and hence the effects of monetary policy. Mei identifies two frictions associated with using credit: a fixed utility cost and delayed
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