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Money Creation in a Random Matching Model

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  • Deviatov Alexei

    () (New Economic School)

Abstract

I study money creation in versions of the Trejos-Wright (1995) and Shi (1995) models with indivisible money and individual holdings bounded at two units. I work with the same class of policies as in Deviatov and Wallace (2001), who study money creation in that model. However, I consider an alternative notion of implementability - the ex ante pairwise core. I compute a set of numerical examples to determine whether money creation is beneficial. I find beneficial effects of money creation if individuals are sufficiently risk averse (obtain sufficiently high utility gains from trade) and impatient.

Suggested Citation

  • Deviatov Alexei, 2006. "Money Creation in a Random Matching Model," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(3), pages 1-20, December.
  • Handle: RePEc:bpj:bejmac:v:topics.6:y:2006:i:3:n:5
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    Citations

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    Cited by:

    1. Huang, Pidong & Igarashi, Yoske, 2015. "Trejos–Wright with a 2-unit bound: Existence and stability of monetary steady states," Mathematical Social Sciences, Elsevier, vol. 73(C), pages 55-62.
    2. repec:fgv:epgrbe:v:67:n:4:a:1 is not listed on IDEAS
    3. Rocheteau, Guillaume, 2012. "The cost of inflation: A mechanism design approach," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1261-1279.
    4. Hu, Tai-Wei & Rocheteau, Guillaume, 2013. "On the coexistence of money and higher-return assets and its social role," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2520-2560.
    5. Bignon, Vincent & Dutu, Richard, 2017. "Coin Assaying And Commodity Money," Macroeconomic Dynamics, Cambridge University Press, vol. 21(06), pages 1305-1335, September.
    6. Deviatov, Alexei & Wallace, Neil, 2009. "A model in which monetary policy is about money," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 283-288, April.
    7. Huang, Pidong & Igarashi, Yoske, 2014. "The instability of some non-full-support steady states in a random matching model of money," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 177-185.
    8. Neil Wallace & Alexei Deviatov, 2008. "A new model of central-bank intervention: some examples," 2008 Meeting Papers 489, Society for Economic Dynamics.
    9. repec:cuf:journl:y:2018:v:19:i:1:nozawa:yang is not listed on IDEAS
    10. Bertolai, Jefferson Donizeti Pereira & Cavalcanti, Ricardo de Oliveira, 2013. "Opposite policy implications in the theory of money and banking," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 67(4), November.
    11. Alexei Deviatov & Neil Wallace, 2014. "Optimal inflation in a model of inside money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 287-293, April.
    12. Zhu, Tao, 2008. "An overlapping-generations model with search," Journal of Economic Theory, Elsevier, vol. 142(1), pages 318-331, September.

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