Money and bonds: an equivalence theorem
AbstractThis paper considers four models in which immortal agents face idiosyncratic shocks and trade only a single risk-free asset over time. The four models specify this single asset to be private bonds, public bonds, public money, or private money respectively. I prove that, given an equilibrium in one of these economies, it is possible to pick the exogenous elements in the other three economies so that there is an outcome-equivalent equilibrium in each of them. (The term ?exogenous variables? refers to the limits on private issue of money or bonds, or the supplies of publicly issued bonds or money.)
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Bibliographic InfoPaper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 393.
Date of creation: 2007
Date of revision:
Other versions of this item:
- NEP-ALL-2007-08-08 (All new papers)
- NEP-CBA-2007-08-08 (Central Banking)
- NEP-DGE-2007-08-08 (Dynamic General Equilibrium)
- NEP-MAC-2007-08-08 (Macroeconomics)
- NEP-MON-2007-08-08 (Monetary Economics)
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