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An evolutionary model of the emergence of the media of exchange

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  • Bilge Ozturk

    (CECO - Laboratoire d'économétrie de l'École polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper uses an evolutionary version of the commodity money model in Kiyotaki and Wright (1989). The main objective of this paper is to study the implications of endogenizing the matching process. Under the endogenous set up we find stability conditions for each kind of equilibrium (fundamental or speculative). The second objective is to analyse the disequilibrium dynamics, when the inventory distribution is not assumed to be continuously at its temporary equilibrium value. We prove that under this setting, for some values of the parameters the fundamental and speculative states are unstable.

Suggested Citation

  • Bilge Ozturk, 2003. "An evolutionary model of the emergence of the media of exchange," Working Papers hal-00242982, HAL.
  • Handle: RePEc:hal:wpaper:hal-00242982
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00242982
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    References listed on IDEAS

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    1. Kiyotaki, Nobuhiro & Wright, Randall, 1991. "A contribution to the pure theory of money," Journal of Economic Theory, Elsevier, vol. 53(2), pages 215-235, April.
    2. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
    3. Sethi, Rajiv, 1999. "Evolutionary stability and media of exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 40(3), pages 233-254, November.
    4. Shi Shougong, 1995. "Money and Prices: A Model of Search and Bargaining," Journal of Economic Theory, Elsevier, vol. 67(2), pages 467-496, December.
    5. Kehoe, Timothy J & Kiyotaki, Nobuhiro & Wright, Randall, 1993. "More on Money as a Medium of Exchange," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 297-314, April.
    6. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, February.
    7. S. Rao Aiyagari & Neil Wallace, 1991. "Existence of Steady States with Positive Consumption in the Kiyotaki-Wright Model," Review of Economic Studies, Oxford University Press, vol. 58(5), pages 901-916.
    8. Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-141, February.
    9. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March.
    10. Aiyagari, S Rao & Wallace, Neil, 1992. "Fiat Money in the Kiyotaki-Wright Model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(4), pages 447-464, October.
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