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Dynamic Monetary Equilibrium in a Random Matching Economy

Author

Listed:
  • Edward J. Green

    () (Federal Reserve Bank of Chicago, U.S.A)

  • Ruilin Zhou

    () (Research Department, Federal Reserve Bank of Chicago, U.S.A)

Abstract

This article concerns an infinite horizon economy where trade must occur pairwise, using a double auction mechanism, and where fiat money overcomes lack of double coincidence of wants. Traders are anonymous and lack market power. Goods are divisible and perishable, and are consumed at every date. Preferences are defined by utility-stream overtaking. Money is divisible and not subject to inventory constraints. The evolution of individual and economywide money holdings distributions is characterized. There is a welfare-ordered continuum of single price equilibria, reflecting indeterminacy of the price level rather than of relative prices. Copyright The Econometric Society 2002.

Suggested Citation

  • Edward J. Green & Ruilin Zhou, 2002. "Dynamic Monetary Equilibrium in a Random Matching Economy," Econometrica, Econometric Society, vol. 70(3), pages 929-969, May.
  • Handle: RePEc:ecm:emetrp:v:70:y:2002:i:3:p:929-969
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    References listed on IDEAS

    as
    1. Gale, Douglas M, 1986. "Bargaining and Competition Part I: Characterization," Econometrica, Econometric Society, vol. 54(4), pages 785-806, July.
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    10. Hendry, S., 1993. "Endogenous Money and Goods Production in a Search Model," UWO Department of Economics Working Papers 9316, University of Western Ontario, Department of Economics.
    11. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
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    13. Zhou, Ruilin, 1999. "Individual and Aggregate Real Balances in a Random-Matching Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 1009-1038, November.
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