Indeterminacy of Buying and Selling Price Spread in Monetary Equilibrium without Transactions Costs
AbstractIn this paper we report an existence result in a general monetary equilibrium model with buying and selling price spread but without transactions costs. Under the assumption that an initial endowment allocation is not Pareto optimal it is proved that an equilibrium with a positive value of money exists if traders take buying and selling prices of commodities as given even if transactions costs are not explicitly required in the buying and selling activities of traders in commodity markets. This result points to an indeterminacy problem arising from existing general equilibrium models with transaction technologies.
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Bibliographic InfoPaper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2003-15.
Length: 14 p.
Date of creation: Feb 2004
Date of revision:
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