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Dynamic Auction Markets with Fiat Money

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  • KAZUYA KAMIYA
  • TAKASHI SHIMIZU

Abstract

In this paper, we consider various types of models where fiat money is used to facilitate trades, and investigate whether models with fiat money have the same equilibrium allocations. In particular, we investigate whether or not such models have a continuum of stationary equilibria. We first present a dynamic centralized auction market model with money, which has not been investigated in the literature. We compare its outcome with that of Walrasian models with cash‐in‐advance constraints, and show that the outcomes are very different: the Walrasian markets model has determinate stationary equilibria and the auction markets model has a continuum of stationary equilibria. Moreover, we also build models on decentralized auction markets and on decentralized markets with bargaining, and obtain results similar to those of the dynamic centralized auction markets model.
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  • Kazuya Kamiya & Takashi Shimizu, 2013. "Dynamic Auction Markets with Fiat Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(2-3), pages 349-378, March.
    • Handle: RePEc:mcb:jmoncb:v:45:y:2013:i:2-3:p:349-378
    DOI: jmcb.12005
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    References listed on IDEAS

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    1. Guillaume Rocheteau & Randall Wright, 2005. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Econometrica, Econometric Society, vol. 73(1), pages 175-202, January.
    2. Kamiya, Kazuya & Shimizu, Takashi, 2011. "Stationary monetary equilibria with strictly increasing value functions and non-discrete money holdings distributions: An indeterminacy result," Journal of Economic Theory, Elsevier, vol. 146(5), pages 2140-2150, September.
    3. Ricardo Lagos & Randall Wright, 2005. "A Unified Framework for Monetary Theory and Policy Analysis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 463-484, June.
    4. 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.
    5. Kazuya Kamiya & Takashi Sato, 2004. "Equilibrium Price Dispersion in a Matching Model with Divisible Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 413-430, May.
    6. Kazuya Kamiya & Takashi Shimizu, 2006. "A Dynamic General Equilibrium Model with Centralized Auction Markets," CIRJE F-Series CIRJE-F-417, CIRJE, Faculty of Economics, University of Tokyo.
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    Cited by:

    1. Kamiya, Kazuya & Kubota, So, 0. "An analytical model of search and bargaining with divisible money," Theoretical Economics, Econometric Society.
    2. Kubota, So & 久保田, 荘, 2019. "Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy," Discussion paper series HIAS-E-84, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    3. Kazuya Kamiya, 2019. "On the Real Determinacy and Indeterminacy of Stationary Equilibria in Monetary Models," Discussion Paper Series DP2019-03, Research Institute for Economics & Business Administration, Kobe University, revised Mar 2021.
    4. Kazuya Kamiya & Takashi Shimizu, 2010. "Hysteresis in Dynamic General Equilibrium Models with Cash-in-Advance Constraints," CARF F-Series CARF-F-232, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

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