This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Money, Intermediaries and Cash-in-Advance Constraints

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Christian Hellwig

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

Abstract

I study a search economy in which intermediaries are the driving force co-ordinating the economy on the use of a unique, common medium of exchange for transactions. If search frictions delay trade, intermediaries offering immediate exchange opportunities can make arbitrage gains from a price spread. As these intermediaries take over transactions, they are confronted to the double coincidence problem of the search market. In the model presented here, intermediaries solve this problem best by imposing a common medium of exchange to other agents, such that a Cash-in-Advance constraint holds: Agents trade twice in order to consume, once to exchange their production against the medium of exchange, and once to receive their consumption good. To select between multiple equilibria, I introduce a criterion of minimal coalition proofness, whereby arbitrarily small coalitions may induce a change from an equilibrium. I show that any minimally coalition-proof equilibrium is Pareto-efficient, and characterize the full set of minimally coalition-proof equilibria of this economy.

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 file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://fmg.lse.ac.uk/pdfs/dp349.pdf
File Format: application/pdf
File Function:
Download Restriction: Financial Markets Group Working Papers are free to download for academics and students, and for our subscribers and sponsors. If you fall into one of these categories but have trouble downloading our papers, or if you do not fall into one of these categories but would like to pay for a copy, please contact us at fmg@lse.ac.uk

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Paper provided by Financial Markets Group in its series FMG Discussion Papers with number dp349.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: Mar 2000
Date of revision:
Handle: RePEc:fmg:fmgdps:dp349

Contact details of provider:
Web page: http://fmg.lse.ac.uk/

For technical questions regarding this item, or to correct its listing, contact: (The FMG Administration).

Related research
Keywords:

Other versions of this item:

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.:
  1. Hellwig, Martin F., 1993. "The challenge of monetary theory," European Economic Review, Elsevier, vol. 37(2-3), pages 215-242, April. [Downloadable!] (restricted)
  2. Howitt, Peter & Clower, Robert, 2000. "The emergence of economic organization," Journal of Economic Behavior & Organization, Elsevier, vol. 41(1), pages 55-84, January. [Downloadable!] (restricted)
  3. S. Rao Aiyagari & Neil Wallace, 1991. "Existence of steady states with positive consumption in the Kiyotaki-Wright model," Working Papers 428, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  4. Gehrig, Thomas, 1993. "Intermediation in Search Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 2(1), pages 97-120, Spring.
    Other versions:
  5. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Christian Hellwig, 2002. "Money, Intermediaries, and Cash-in-Advance Constraints (February 2003)," UCLA Economics Online Papers 207, UCLA Department of Economics. [Downloadable!]
  2. Ross Starr, 2002. "Existence of Uniqueness of "Money" in General Equilibrium: Natural Monopoly in the Most Liquid Asset," University of California at San Diego, Economics Working Paper Series 2002-20, Department of Economics, UC San Diego. [Downloadable!]
  3. Ross M. Starr, 2000. "Why Is There Money? Endogenous Derivation of 'Money' as the Most Liquid Asset: A Class of Examples," University of California at San Diego, Economics Working Paper Series 2000-25, Department of Economics, UC San Diego. [Downloadable!]
Statistics
Access and download statistics

Did you know? Authors can create their own profile with links to their works on the RePEc Author Service.

This page was last updated on 2008-10-9.

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.