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On the Role of Paper Money in General Equilibrium Model without Transactions Costs

Author

Listed:
  • KAJII, Atsushi

    (Department of Economics, University of Pennsylvania)

Abstract

It is well known that a competititve equilibrium may fail to exist when preferences are possibly satiated. We show that this non-existence problem does not arise if one of the commodities is paper money. Moreover, an equilibrium is Pareto efficient in the economy with money. This paper therefore gives an economic solution to the classical problem of non-existence of competitive equilibria cause by satiation.

Suggested Citation

  • KAJII, Atsushi, 1994. "On the Role of Paper Money in General Equilibrium Model without Transactions Costs," LIDAM Discussion Papers CORE 1994008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1994008
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1994.html
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    More about this item

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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