Fiat Money and the Value of Binding Portfolio Constraints

This file is part of IDEAS, which uses RePEc data

Fiat Money and the Value of Binding Portfolio Constraints

Author Info

Mário R. Páscoa
Myrian Petrassi
Juan Pablo Torres-Martínez

Additional information is available for the following registered author(s):

Juan Pablo Torres-Martinez

Abstract

It is well known that, under uniform impatience, positive net supply assets are free of bubbles for non-arbitrage kernel deflators that yield finite present values of wealth. However, this does not mean that prices cannot be above the series of deflated dividends for the deflators given by the agents' marginal rates of substitution, which also yield finite present values of wealth. In particular, binding no-short-sales constraints lead to positive prices of fiat money. These monetary equilibria are Pareto improvements but they are still inefficient.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

Publisher Info
Paper provided by Central Bank of Brazil, Research Department in its series Working Papers Series with number 176.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:bcb:wpaper:176

Contact details of provider:
Web page: http://www.bcb.gov.br/?english

For technical questions regarding this item, or to correct its listing, contact: (Benjamin Tabak).

Related research
Keywords:

Other versions of this item:

Paper
- Páscoa, Mário R. & Petrassi, Myrian & Torres-Martínez, Juan Pablo, 2009. "Fiat money and the value of binding portfolio constraints," MPRA Paper 13782, University Library of Munich, Germany, revised Nov 2009. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-01-24 (All new papers)
NEP-CBA-2009-01-24 (Central Banking)
NEP-DGE-2009-01-24 (Dynamic General Equilibrium)
NEP-MAC-2009-01-24 (Macroeconomics)
NEP-MON-2009-01-24 (Monetary Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Hahn, Frank H, 1973. "On Transaction Costs, Inessential Sequence Economies and Money," Review of Economic Studies, Blackwell Publishing, vol. 40(4), pages 449-61, October. [Downloadable!] (restricted)
Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467. [Downloadable!] (restricted)
Grandmont, Jean-Michel & Younes, Yves, 1972. "On the Role of Money and the Existence of a Monetary Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 39(3), pages 355-72, July. [Downloadable!] (restricted)
Araujo, Aloisio & Fajardo, Jose & Pascoa, Mario R., 2005. "Endogenous collateral," Journal of Mathematical Economics, Elsevier, vol. 41(4-5), pages 439-462, August. [Downloadable!] (restricted)
Other versions:
- Páscoa, Mario Rui & Araújo, Aloísio Pessoa de & Barbachan, José Santiago Fajardo, 2003. "Endogenous Collateral," Economics Working Papers (Ensaios Economicos da EPGE) 511, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
- Araujo, Aloisio. & Fajardo, J. & Páscoa. M. R., 2004. "Endogenous Collateral," Finance Lab Working Papers flwp_68, Finance Lab, Ibmec São Paulo. [Downloadable!]
- MÃ¡rio PÃ¡scoa & Aloisio Araujo & JosÃ© Fajardo, 2004. "Endogenous Collateral," Econometric Society 2004 Latin American Meetings 161, Econometric Society. [Downloadable!]
Grandmont, Jean-Michel & Younes, Yves, 1973. "On the Efficiency of a Monetary Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 40(2), pages 149-65, April. [Downloadable!] (restricted)
Hernandez D., Alejandro & Santos, Manuel S., 1996. "Competitive Equilibria for Infinite-Horizon Economies with Incomplete Markets," Journal of Economic Theory, Elsevier, vol. 71(1), pages 102-130, October. [Downloadable!] (restricted)
Laibson, David, 1998. "Life-cycle consumption and hyperbolic discount functions," European Economic Review, Elsevier, vol. 42(3-5), pages 861-871, May. [Downloadable!] (restricted)
Magill, Michael & Quinzii, Martine, 1996. "Incomplete markets over an infinite horizon: Long-lived securities and speculative bubbles," Journal of Mathematical Economics, Elsevier, vol. 26(1), pages 133-170. [Downloadable!] (restricted)
Other versions:
- Magill, M. & Quinzii, M., 1993. "Icomplete Markets Over an Infinite Horizon: Long-Lived Securities and Speculative Bubbles," Papers 9321, Southern California - Department of Economics.
Manuel S. Santos & Michael Woodford, 1997. "Rational Asset Pricing Bubbles," Econometrica, Econometric Society, vol. 65(1), pages 19-58, January.
Other versions:
- Manuel S. Santos & Michael Woodford, 1993. "Rational Asset Pricing Bubbles," Working Papers 9304, Centro de Investigacion Economica, ITAM.

Full references

Statistics
Access and download statistics

Did you know? A few items listed on IDEAS are over 2000 years old!

This page was last updated on 2009-11-4.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.