Unstable and stable steady-states in the Kiyotaki-Wright model
AbstractI provide new results concerning dynamics for a version of the Kiyotaki-Wright model (1989) in which strategies (either mixed or pure) are restricted so that agents play the same strategy for each opportunity set. My results demonstrate the importance of examining stability in such models, because they show that many steady states focused on in the literature are not stable. Furthermore, I exhibit examples of two-period-convergent equilibria in which agents are indifferent among media of exchange. Consequently, their endogenous transaction pattern is analog to the coexistence of assets whose acceptability or "liquidity" varies inversely with their rates of return.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 11 (1998)
Issue (Month): 2 ()
Note: Received: June 21, 1996; revised version: December 2, 1996
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
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- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
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