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Money and price dynamics in a market with strategic bargaining

Author

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  • Noritaka Kudoh

    () (Hokkaido University)

Abstract

This paper studies a strategic bargaining model of money and prices to complement the results reported in Coles and Wright (1998). The probability of a bargaining breakdown is chosen to be consistent with market conditions in the spirit of Rubinstein and Wolinsky (1985). The unique monetary steady state coincides with the one under asymmetric Nash bargaining. The dynamics of the price level are determined without any reference to the value of search. The dynamic properties of the model resemble those of traditional monetary models.

Suggested Citation

  • Noritaka Kudoh, 2010. "Money and price dynamics in a market with strategic bargaining," Economics Bulletin, AccessEcon, vol. 30(1), pages 709-719.
  • Handle: RePEc:ebl:ecbull:eb-10-00015
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I1-P66.pdf
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Fran├žois R. Velde & Warren E. Weber & Randall Wright, 1999. "A Model of Commodity Money, with Applications to Gresham's Law and the Debasement Puzzle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, pages 291-323.
    3. Coles, Melvyn G. & Wright, Randall, 1998. "A Dynamic Equilibrium Model of Search, Bargaining, and Money," Journal of Economic Theory, Elsevier, vol. 78(1), pages 32-54, January.
    4. Brock, William A., 1975. "A simple perfect foresight monetary model," Journal of Monetary Economics, Elsevier, vol. 1(2), pages 133-150, April.
    5. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-1150, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    money; bargaining; price dynamics.;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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