Non-robustness of the Cash-in-Advance Equilibrium in the Trading-Post Model
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.
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- Howitt, P W, 1974. "Stability and the Quantity Theory," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 133-51, Jan.-Feb..
- Fumio Hayashi & Akihiko Matsui, 1994.
"A Model of Fiat Money and Barter,"
NBER Working Papers
4919, National Bureau of Economic Research, Inc.
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