| Summary: | 碩士 === 淡江大學 === 經濟學系碩士班 === 95 === This paper uses the cash-in-advance (CIA) model for the household optimization problem, studying the effects of inflation with the role credit. The paper especially focuses on the effects of contracted interest rate of credit, which is contracted after the financial organizations provide the loan for credit-good consumption, on various economic variables. Besides the steady-state effects, this paper also studies the short-run effect of credit in the CIA model.
We find that the more the household prefer the credit-good consumption, the longer the relationship between the growth rate of money supply and the inflation rate, and also the contracted interest rate. It means that, if the household had not been able to repay its credit goods punctually, the inflation rate will increase exceptionally; this conclusion is different from those previous.
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