Stationarity without degeneracy in a model of commodity money
We develop a model of macroeconomic heterogeneity inspired by the Kiyotaki-Wright (1989) formulation of commodity money, with the addition of linear utility and idiosyncratic shocks to savings. We consider two environments. In the benchmark case, the consumer in a meeting is chosen randomly. In the auctions case, the individual holding more money can be selected to be the consumer. We show that in both environments socially optimal trading decisions (that are individually acceptable) are stationary and solve a tractable static op- timization problem. Savings decisions in the benchmark case are re- markably invariant to mean-preserving changes in the distribution of shocks. This result is overturned in the auctions case.
(This abstract was borrowed from another version of this item.)
Volume (Year): 43 (2010)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://link.springer.de/link/service/journals/00199/index.htm|
|Order Information:||Web: http://link.springer.de/orders.htm|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July.
- Aiyagari, S Rao & Wallace, Neil, 1992. "Fiat Money in the Kiyotaki-Wright Model," Economic Theory, Springer, vol. 2(4), pages 447-64, October.
- Charalambos D Aliprantis & Gabriele Camera & Daniela Puzzello, 2007. "Contagion Equilibria in a Monetary Model," Econometrica, Econometric Society, vol. 75(1), pages 277-282, 01.
- Shouyong Shi, 1997.
"A Divisible Search Model of Fiat Money,"
Econometric Society, vol. 65(1), pages 75-102, January.
- Hector Lomeli & Ted Temzelides, 2002. "Discrete time dynamics in a random matching monetary model," Economic Theory, Springer, vol. 20(2), pages 259-269.
- Ricardo Lagos & Randall Wright, 2002.
"A unified framework for monetary theory and policy analysis,"
0211, Federal Reserve Bank of Cleveland.
- 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.
- Ricardo Lagos & Randall Wright, 2004. "A unified framework for monetary theory and policy analysis," Staff Report 346, Federal Reserve Bank of Minneapolis.
- Huggett, Mark & Krasa, Stefan, 1996.
"Money and Storage in a Differential Information Economy,"
Springer, vol. 8(2), pages 191-210, August.
- Mark Huggett & Stefan Krasa, 1996. "Money and storage in a differential information economy (*)," Economic Theory, Springer, vol. 8(2), pages 191-209.
- Ricardo Lagos & Guillaume Rocheteau, 2006.
"Money and capital as competing media of exchange,"
0608, Federal Reserve Bank of Cleveland.
- Charalambos Aliprantis & Gabriele Camera & Daniela Puzzello, 2006. "Matching and anonymity," Economic Theory, Springer, vol. 29(2), pages 415-432, October.
- Manolis Galenianos & Philipp Kircher, 2008.
"A model of money with multilateral matching,"
LSE Research Online Documents on Economics
29701, London School of Economics and Political Science, LSE Library.
- Aliprantis, C.D. & Camera, Gabriele & Puzzello, D., 2005.
"Anonymous Markets and Monetary Trading,"
Purdue University Economics Working Papers
1179, Purdue University, Department of Economics.
- Kehoe, Timothy J & Kiyotaki, Nobuhiro & Wright, Randall, 1993.
"More on Money as a Medium of Exchange,"
Springer, vol. 3(2), pages 297-314, April.
- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
- Julien, BenoI^t & Kennes, John & King, Ian, 2008. "Bidding for money," Journal of Economic Theory, Elsevier, vol. 142(1), pages 196-217, September.
- Ricardo O. Cavalcanti & Andrés Erosa, 2007. "A theory of capital gains taxation and business turnover," Economic Theory, Springer, vol. 32(3), pages 477-496, September.
When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:43:y:2010:i:2:p:263-280. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F Baum)
If references are entirely missing, you can add them using this form.