CURRENCY AND CREDIT ARE EQUIVALENT MECHANISMS

I study a pure exchange economy with many agents whose marginal utilit y of consumption is stochastically heterogeneous and independent of we alth, with realized marginal utility of wealth private information. I show that currency and credit are equivalent to a contract that is eff icient when the privacy of information is viewed as a constraint, and that the cash in advance constraint is an expression of an incentive c onstraint.