On the Role of Tax-Subsidy Scheme in Money Search Models
AbstractThis paper investigates the role of policy in money search models with divisible money. Recently, real indeterminacy of stationary equilibria has been found in both specific and general search models with divisible money. Thus if we assume the divisibility of money, it would be quite difficult to make accurate predictions of the effects of simple monetary policies. Instead, we show that some tax-subsidy schemes select a determinate efficient equilibrium. In other words, for a given efficient equilibrium and for any real number δ > 0, a certain tax-subsidy scheme induces a locally determinate equilibrium within the δ -neighborhood of the given equilibrium. Moreover, the size of the tax-subsidy can be arbitrarily small.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-323.
Length: 33 pages
Date of creation: Mar 2005
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Other versions of this item:
- Kazuya Kamiya & Takashi Shimizu, 2007. "On The Role Of Tax Subsidy Scheme In Money Search Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 575-606, 05.
- NEP-ALL-2005-03-13 (All new papers)
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- Kazuya Kamiya & Takashi Shimizu, 2005.
"Real Indeterminacy of Stationary Equilibria in Matching Models with Divisible Money,"
CIRJE-F-390, CIRJE, Faculty of Economics, University of Tokyo.
- Kamiya, Kazuya & Shimizu, Takashi, 2006. "Real indeterminacy of stationary equilibria in matching models with divisible money," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 594-617, August.
- Kamiya, Kazuya & Talman, Dolf, 2009. "Matching models with a conservation law: The existence and global structure of the set of stationary equilibria," Journal of Mathematical Economics, Elsevier, vol. 45(5-6), pages 397-413, May.
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