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Asset dynamics, liquidity, and inequality in decentralized markets

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  • Maurizio Iacopetta

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Raoul Minetti

    (Michigan State University [East Lansing] - Michigan State University System)

Abstract

The Kiyotakiand Wright model has exerted a considerable influence on the monetary search literature. We argue that the model also delivers important insights into a broader range of macroeconomic and development issues. The analysis studies how market frictions and the liquidity of assets affect the distribution of income. Experiments illustrate how the economy adjusts to shocks to asset returns and to the matching technology. They also deal with long-run transition. An experiment interprets the reversal of fortune hypothesis as a situation in which an economy with a low-return asset takes over a similar economy with a high-return asset.

Suggested Citation

  • Maurizio Iacopetta & Raoul Minetti, 2019. "Asset dynamics, liquidity, and inequality in decentralized markets," SciencePo Working papers Main hal-03403574, HAL.
    • Handle: RePEc:hal:spmain:hal-03403574
    DOI: 10.1111/ecin.12721
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03403574
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    Cited by:

    1. Maurizio Iacopetta, 2021. "Class Di¤erences and the Commercial Revolution: An Equilibrium Selection Story," SciencePo Working papers Main halshs-03515585, HAL.
    2. Iacopetta, Maurizio, 2021. "Class differences and the Commercial Revolution: An equilibrium selection story," Economic Modelling, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    Decentralized markets; Asset dynamics;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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