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Search, Bargaining, Money, and Prices

  • Trejos, Alberto
  • Wright, Randall

This goal of this paper is to extend existing search-theoretic models of fiat money, which until now have assumed that the price level is exogenous, by explicitly incorporating bilateral bargaining. This allows the determination of the price level endogenously and leads to additional insights concerning the role of money. For example, the authors find that monetary equilibria are generally inefficient in the sense that output and prices differ from the solution to a social planner's problem, although the difference can become small as the discount rate or search friction vanishes. The authors also find that there exist nonstationary inflationary equilibria. Copyright 1995 by University of Chicago Press.

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File URL: http://dx.doi.org/10.1086/261978
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 103 (1995)
Issue (Month): 1 (February)
Pages: 118-41

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Handle: RePEc:ucp:jpolec:v:103:y:1995:i:1:p:118-41
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  2. N/A, 1985. "Chapter I. The Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 114(1), pages 6-32, November.
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  7. Joseph M. Ostroy & Ross M. Starr, 1988. "The Transactions Role of Money," UCLA Economics Working Papers 505, UCLA Department of Economics.
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  9. anonymous, 1985. "Economic update," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, september.
  10. Marimon, Ramon & McGrattan, Ellen & Sargent, Thomas J., 1990. "Money as a medium of exchange in an economy with artificially intelligent agents," Journal of Economic Dynamics and Control, Elsevier, vol. 14(2), pages 329-373, May.
  11. Cuadras-Morato, Xavier, 1994. "Commodity Money in the Presence of Goods of Heterogeneous Quality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(4), pages 579-91, May.
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  14. N/A, 1985. "Chapter I. The Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 113(1), pages 5-19, August.
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  16. Oh, Seonghwan, 1989. "A theory of a generally acceptable medium of exchange and barter," Journal of Monetary Economics, Elsevier, vol. 23(1), pages 101-119, January.
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  20. N/A, 1985. "Chapter II. The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 112(1), pages 19-30, May.
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  22. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  23. anonymous, 1985. "Economic notes," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, april.
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  30. anonymous, 1985. "A quarterly review of the New Zealand economy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, may.
  31. 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.
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  34. Jones, Robert A, 1976. "The Origin and Development of Media of Exchange," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 757-75, August.
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  36. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  37. -, 1985. "Economía brasileña en 1985: informe estadístico," Oficina de la CEPAL en Brasilia (Estudios e Investigaciones) 28296, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  38. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
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  42. N/A, 1985. "New World Economic Order," India Quarterly: A Journal of International Affairs, Indian Council of World Affairs, vol. 41(1), pages 158-162, January.
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  44. anonymous, 1985. "Economic update," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, august.
  45. N/A, 1985. "Chapter I. The Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 112(1), pages 5-18, May.
  46. anonymous, 1985. "Economic notes," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, january.
  47. anonymous, 1985. "Economic notes," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, may.
  48. Anonymous, 1985. "Agricultural Economics Reference Room," Staff Papers 200904, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  49. anonymous, 1985. "Quarterly review of the New Zealand economy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 48, november.
  50. N/A, 1985. "Calendar of Economic Events July-September 1985," National Institute Economic Review, National Institute of Economic and Social Research, vol. 114(1), pages 90-104, November.
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