On the Role of Tax-Subsidy Scheme in Money Search Models (Subsequently published in "International Economic Review" 48, 2007, 575-606. )
AbstractThis paper investigates the role of policy in money search models with divisible money. Recently, real indeterminacy of stationary equilibria has been found in both specific and general search models with divisible money. Thus if we assume the divisibility of money, it would be quite difficult to make accurate predictions of the effects of simple monetary policies. Instead, we show that some tax-subsidy schemes select a determinate efficient equilibrium. In other words, for a given efficient equilibrium and for any real number ? > 0, a certain tax-subsidy scheme induces a locally determinate equilibrium within the ? -neighborhood of the given equilibrium. Moreover, the size of the tax-subsidy can be arbitrarily small.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-025.
Length: 33 pages
Date of creation: Mar 2005
Date of revision:
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.:
- Camera, G. & Corbae, D., 1998.
"Money and Price Dispersion,"
98-03, University of Iowa, Department of Economics.
- Akihiko Matsui & Takashi Shimizu, 2005. "A Theory Of Money And Marketplaces," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 35-59, 02.
- Edward J. Green & Ruilin Zhou, 2000.
"Dynamic monetary equilibrium in a random-matching economy,"
Working Paper Series
WP-00-1, Federal Reserve Bank of Chicago.
- Edward J. Green & Ruilin Zhou, 2002. "Dynamic Monetary Equilibrium in a Random Matching Economy," Econometrica, Econometric Society, vol. 70(3), pages 929-969, May.
- Zhou, Ruilin, 1999.
"Individual and Aggregate Real Balances in a Random-Matching Model,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 1009-38, November.
- Ruilin Zhou, 1996. "Individual and aggregate real balances in a random matching model," Staff Report 222, Federal Reserve Bank of Minneapolis.
- Ruilin Zhou, 1996. "Individual and Aggregate Real Balances in a Random Matching Model," GE, Growth, Math methods 9612001, EconWPA, revised 23 Dec 1996.
- S. Rao Aiyagari & Neil Wallace & Randall Wright, 1996.
"Coexistence of money and interest-bearing securities,"
550, Federal Reserve Bank of Minneapolis.
- Rao Aiyagari, S. & Wallace, Neil & Wright, Randall, 1996. "Coexistence of money and interest-bearing securities," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 397-419, June.
- Edward J. Green & Ruilin Zhou, 1996.
"A Rudimentary Random-Matching Model with Divisible Money and Prices,"
GE, Growth, Math methods
9606001, EconWPA, revised 25 Jul 1996.
- Green, Edward J. & Zhou, Ruilin, 1998. "A Rudimentary Random-Matching Model with Divisible Money and Prices," Journal of Economic Theory, Elsevier, vol. 81(2), pages 252-271, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.