Dynamic monetary equilibrium in a random-matching economy
AbstractThis article concerns decentralized trading and efficiency. As in Gale (1986a, b), traders transfer endowments of divisible goods in random, pairwise meetings that take place in discrete time. Anonymity and absence of time preference forestall strategic power. As in Kiyotaki and Wright (1989), and in contrast to Gale, trade and consumption occur repeatedly. Absence of double coincidence of wants makes money essential. There is a continuum of welfare-ranked equilibria in which the level of economic activity is decreasing in the price level, from which Gale abstracts by focusing on relative prices. This indeterminacy constitutes coordination failure.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-00-1.
Date of creation: 2000
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Other versions of this item:
- Edward J. Green & Ruilin Zhou, 2002. "Dynamic Monetary Equilibrium in a Random Matching Economy," Econometrica, Econometric Society, vol. 70(3), pages 929-969, May.
- NEP-ALL-2000-04-17 (All new papers)
- NEP-DGE-2000-04-17 (Dynamic General Equilibrium)
- NEP-MIC-2000-04-17 (Microeconomics)
- NEP-MON-2000-04-17 (Monetary Economics)
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