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Non-robustness of the Cash-in-Advance Equilibrium in the Trading-Post Model


  • Krishna, R. Vijay

    (Pennsylvania State U)


The main justification for cash-in-advance (CIA) equilibria when there are multiple assets is a Shapley-Shubik trading-post model where the agents coordinate on a particular medium of exchange. Of course, there are other equilibria. We introduce a refinement and show that the CIA equilibrium does not satisfy our refinement while there exist equilibria that do.

Suggested Citation

  • Krishna, R. Vijay, 2003. "Non-robustness of the Cash-in-Advance Equilibrium in the Trading-Post Model," Working Papers 9-03-2, Pennsylvania State University, Department of Economics.
  • Handle: RePEc:ecl:peneco:9-03-2

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    References listed on IDEAS

    1. Hayashi, Fumio & Matsui, Akihiko, 1996. "A Model of Fiat Money and Barter," Journal of Economic Theory, Elsevier, vol. 68(1), pages 111-132, January.
    2. Howitt, P W, 1974. "Stability and the Quantity Theory," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 133-151, Jan.-Feb..
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