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A comment on: 'Efficient propagation of shocks and the optimal return on money'

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  • Huang, Pidong

Abstract

Lotteries are introduced into Cavalcanti and Erosa (2008) [2], a version of Trejos and Wright (1995) [4] with aggregate shocks. Lotteries improve welfare and eliminate the two notable features of the optimum with deterministic trades: over-production and history-dependence. Moreover, the optimum can be supported by buyer take-it-or-leave-it offers.

Suggested Citation

  • Huang, Pidong, 2012. "A comment on: 'Efficient propagation of shocks and the optimal return on money'," MPRA Paper 46621, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46621
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    File URL: https://mpra.ub.uni-muenchen.de/46621/1/MPRA_paper_46621.pdf
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    References listed on IDEAS

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    1. O. Cavalcanti, Ricardo de & Erosa, Andrés, 2008. "Efficient propagation of shocks and the optimal return on money," Journal of Economic Theory, Elsevier, vol. 142(1), pages 128-148, September.
    2. Ricardo de O. Cavalcanti & Neil Wallace, 1999. "A model of private bank-note issue," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 104-136, January.
    3. Berentsen, Aleksander & Molico, Miguel & Wright, Randall, 2002. "Indivisibilities, Lotteries, and Monetary Exchange," Journal of Economic Theory, Elsevier, vol. 107(1), pages 70-94, November.
    4. Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-141, February.
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    Cited by:

    1. Neil Wallace, 2014. "An Attractive Monetary Model with Surprising Implications for Optima: Two Examples," Quarterly Review, Federal Reserve Bank of Minneapolis, issue March, pages 1-16.

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    More about this item

    Keywords

    Random matching model of money; Aggregate shock; Optimal allocation; History-dependence; Lottery;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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