Liquidity, Bargaining, and Multiple Equilibria in a Search Monetary Model
AbstractIn this paper I construct a search monetary model with capital accumulation where money and goods are both divisible. Agents in matches determine the terms of trade through a sequential bargaining process and they face trading restrictions that require the quantity of money traded not to exceed what the buyer brings into the match. I show that sellers¡¯ share of the match surplus decreases with the severity of the trading restrictions. Such endogenous surplus shares generate multiple, self-fulfilling monetary steady states. When liquidity is interpreted as the number of transactions, the steady state with higher aggregate activities has higher liquidity. In both steady states, an increase in the money growth rate increases aggregate output and consumption by increasing the number of matches.
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 China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 63.
Length: 27 pages
Date of creation: Nov 2000
Date of revision: Oct 2001
Publication status: Published in Annals of Economics and Finance, Nov 2001, pages 325-351
Money Search; Capital; Liquidity; Multiplicity; Bargaining;
Other versions of this item:
- Shouyong Shi, 2001. "Liquidity, Bargaining, and Multiple Equilibria in a Search Monetary Model," Annals of Economics and Finance, Society for AEF, vol. 2(2), pages 325-351, November.
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Berentsen, Aleksander & Rocheteau, Guillaume, 2002.
"On the efficiency of monetary exchange: how divisibility of money matters,"
Journal of Monetary Economics,
Elsevier, vol. 49(8), pages 1621-1649, November.
- Aleksander Berentsen & Guillaume Rocheteau, . "On the Efficiency of Monetary Exchange:How Divisibility of Money Matters," IEW - Working Papers 101, Institute for Empirical Research in Economics - University of Zurich.
- Christian Korth & Stefan Napel, 2008.
"Fairness, Price Stickiness, and History Dependence in Decentralized Trade,"
064, Bavarian Graduate Program in Economics (BGPE).
- Korth, Christian & Napel, Stefan, 2009. "Fairness, price stickiness, and history dependence in decentralized trade," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 502-514, August.
- Christian Korth & Stefan Napel, 2009. "Fairness, Price Stickiness, and History Dependence in Decentralized Trade," Working Papers 068, Bavarian Graduate Program in Economics (BGPE).
- Aleksander Berentsen & Guillaume Rocheteau, 2002. "Money in Bilateral Trade," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(IV), pages 489-506, December.
- Shouyong Shi, 2008.
"Efficiency Improvement from Restricting the Liquidity of Nominal Bonds,"
tecipa-329, University of Toronto, Department of Economics.
- Shi, Shouyong, 2008. "Efficiency improvement from restricting the liquidity of nominal bonds," Journal of Monetary Economics, Elsevier, vol. 55(6), pages 1025-1037, September.
- Wang, Weimin & Shi, Shouyong, 2006.
"The variability of velocity of money in a search model,"
Journal of Monetary Economics,
Elsevier, vol. 53(3), pages 537-571, April.
- Weimin Wang & Shouyong Shi, 2006. "The Variability of Velocity of Money in a Search Model," Working Papers tecipa-190, University of Toronto, Department of Economics.
- Shouyong Shi, 2002. "Nominal Bonds and Interest Rates: The Case of One-Period Bonds," Working Papers shouyong-03-03, University of Toronto, Department of Economics.
- Denis Nitikin & Chunli Shen & Qian Wang & Heng-fu Zou, 2011. "Land Taxation in China: Assessment of Prospects for Politically and Economically Sustainable Reform," CEMA Working Papers 431, China Economics and Management Academy, Central University of Finance and Economics.
- Heng-fu Zou, 2011. "Foreign Asset Accumulation and Macroeconomic Policies in a Model of Mercantilism," CEMA Working Papers 432, China Economics and Management Academy, Central University of Finance and Economics.
- Wang, Gaowang & Zou, Heng-fu, 2011. "Mercantilism, Foreign Asset Accumulation and Macroeconomic Policy," MPRA Paper 34519, University Library of Munich, Germany.
- Wang, Gaowang, 2011. "Time Preference and Interest Rate in a dynamic general Equilibrium Model," MPRA Paper 34063, University Library of Munich, Germany.
- Martin Menner, 2011. ""Gesell Tax" and Efficiency of Monetary Exchange," Working Papers. Serie AD 2011-26, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao).
If references are entirely missing, you can add them using this form.