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Discrete time dynamics in a random matching monetary model

Author

Listed:
  • Hector Lomeli

    () (Department of Mathematics, ITAM, Mexico City, MEXICO)

  • Ted Temzelides

    () (Department of Economics, University of Iowa, IA 52242, USA)

Abstract

Under take-it-or-leave-it offers, dynamic equilibria in the discrete time random matching model of money are a "translation" of dynamic equilibria in the standard overlapping generations model. This formalizes earlier conjectures about the equivalence of dynamic behavior in the two models and implies the indeterminacy of dynamic equilibria in the random matching model. As in the overlapping generations model, the indeterminacy disappears if an arbitrarily small utility to holding money is introduced. We introduce a different pricing mechanism, one that puts into sharp focus that agents are forward-looking when they interact.

Suggested Citation

  • Hector Lomeli & Ted Temzelides, 2002. "Discrete time dynamics in a random matching monetary model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(2), pages 259-269.
  • Handle: RePEc:spr:joecth:v:20:y:2002:i:2:p:259-269
    Note: Received: January 18, 2001; revised version: May 25, 2001
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    Citations

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    Cited by:

    1. Pidong Huang & Yoske Igarashi, 2013. "Why Ten $1’s Are Not Treated as a $10," Discussion Papers 1310, Exeter University, Department of Economics.
    2. R. O. Cavalcanti & Daniela Puzzello, 2010. "Stationarity without degeneracy in a model of commodity money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(2), pages 263-280, May.
    3. Pidong Huang, 2015. "Robustness of Stability to Cost of Carrying Money in a Matching Model of Money," Annals of Economics and Finance, Society for AEF, vol. 16(1), pages 95-114, May.
    4. 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.
    5. Lagos, Ricardo & Wright, Randall, 2003. "Dynamics, cycles, and sunspot equilibria in 'genuinely dynamic, fundamentally disaggregative' models of money," Journal of Economic Theory, Elsevier, vol. 109(2), pages 156-171, April.
    6. 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.
    7. Huang, Pidong, 2013. "Robustness of Stability to cost of carrying money in a Matching Model of Money," MPRA Paper 46625, University Library of Munich, Germany.

    More about this item

    Keywords

    Monetary equilibrium; Dynamics; Topological conjugacy.;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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