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Credit, Money and Asset Equilibria with Indivisible Goods

Author

Listed:
  • Han Han

    (School of Economics Peking University)

  • Benoit Julien

    (UNSW Australia)

  • Asgerdur Petursdottir

    (University of Bath)

  • Liang Wang

    (University of Hawaii Manoa)

Abstract

We study the trade of indivisible goods using credit, divisible money and divisible assets in a frictional market. We show how indivisibility matters for equilibria. Bargaining generates a price that is not linked to nominal interest rates, dividend value of the asset, or the number of active buyers. To reestablish this connection, we consider price posting with competitive search. We provide conditions under which stationary equilibrium exists. With bargaining, we find that for negative dividend value on the asset, multiple equilibria occur. Otherwise, in all possible combinations of liquidity and price mechanisms the equilibrium is unique or generically unique.

Suggested Citation

  • Han Han & Benoit Julien & Asgerdur Petursdottir & Liang Wang, 2016. "Credit, Money and Asset Equilibria with Indivisible Goods," Working Papers 201608, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201608
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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_16-08R.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Athanasios, Geromichalos & Kuk Mo, Jung, 2016. "Monetary Policy and Efficiency in Over-the-Counter Financial Trade," MPRA Paper 71455, University Library of Munich, Germany.
    2. Chao Gu & Han Han & Randall Wright, 2016. "The Effects of Monetary Policy and Other Announcements," Working Papers 1621, Department of Economics, University of Missouri.

    More about this item

    Keywords

    Nash Bargaining; Competitive Search; Indivisibility; Multiplicity; Uniqueness;

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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