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An Axiomatic Characterization of the Price-Money Message Mechanism

Author

Listed:
  • Ken Urai

    (Graduate School of Economics, Osaka University)

  • Hiromi Murakami

    (Graduate School of Economics, Osaka University)

Abstract

The axiomatic characterization of price or market equilibrium is one of the most important problems in the general equilibrium theory. There does not seem to exist, however, so many papers on the axiomatic characterization problem of monetary equilibrium. The overlapping-generations model with a double in nity of commodities and agents is one of the most fundamental frameworks for intro- ducing money into an economic model, although a simple game-theoretic or welfare characterization on the role of money under competitive mechanism is widely known to be difficult. In this paper, we show that the informational efficiency axiomatic characterization as in Hurwicz (1960), Mount and Reiter (1974) and Sonnenschein (1974) is possible for the price-money competitive mechanism for overlapping-generations economies among the class of all allocation mechanisms with messages. Espe- cially, the category theoretic universal mapping characterization in Sonnenschein (1974) is generalized and applied to the overlapping-generations framework through our monetary version of Debreu-Scarf's core limit theorem of Urai and Murakami (2015). Our argument is also closely related to the replica characterization approaches of Walrasian social choice mechanism like Thomson (1988) and Nagahisa (1994), and provide a comprehensive perspective on them.

Suggested Citation

  • Ken Urai & Hiromi Murakami, 2015. "An Axiomatic Characterization of the Price-Money Message Mechanism," Discussion Papers in Economics and Business 15-31, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1531
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    References listed on IDEAS

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    1. Esteban, J., 1986. "A characterization of the core in overlapping-generations economies," Journal of Economic Theory, Elsevier, vol. 39(2), pages 439-456, August.
    2. Jordan, J. S., 1982. "The competitive allocation process is informationally efficient uniquely," Journal of Economic Theory, Elsevier, vol. 28(1), pages 1-18, October.
    3. Balasko, Yves & Shell, Karl, 1980. "The overlapping-generations model, I: The case of pure exchange without money," Journal of Economic Theory, Elsevier, vol. 23(3), pages 281-306, December.
    4. Toshihiko Hayashi, 1976. "Monetary Equilibrium in Two Classes of Stationary Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 269-284.
    5. Thomson, William, 1988. "A study of choice correspondences in economies with a variable number of agents," Journal of Economic Theory, Elsevier, vol. 46(2), pages 237-254, December.
    6. Aliprantis, Charalambos D. & Burkinshaw, Owen, 1990. "An overlapping generations model core equivalence theorem," Journal of Economic Theory, Elsevier, vol. 50(2), pages 362-380, April.
    7. Mount, Kenneth & Reiter, Stanley, 1974. "The informational size of message spaces," Journal of Economic Theory, Elsevier, vol. 8(2), pages 161-192, June.
    8. Gerard Debreu, 1963. "On a Theorem of Scarf," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 30(3), pages 177-180.
    9. Ken Urai & Hiromi Murakami, 2014. "Replica Core Equivalence Theorem: An Extension of the Debreu-Scarf Limit Theorem to Double Infinity Monetary Economies," Discussion Papers in Economics and Business 14-35-Rev., Osaka University, Graduate School of Economics, revised Mar 2015.
    10. Ken Urai & Hiromi Murakami, 2014. "Replica Core Equivalence Theorem: An Extension of the Debreu-Scarf Limit Theorem to Double Infinity Monetary Economies," Discussion Papers in Economics and Business 14-35-Rev.2, Osaka University, Graduate School of Economics, revised May 2015.
    11. Sonnenschein, Hugo, 1974. "An Axiomatic Characterization of the Price Mechanism," Econometrica, Econometric Society, vol. 42(3), pages 425-433, May.
    12. Osana, Hiroaki, 1978. "On the informational size of message spaces for resource allocation processes," Journal of Economic Theory, Elsevier, vol. 17(1), pages 66-78, February.
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    Cited by:

    1. Ken Urai & Hiromi Murakami, 2015. "An Axiomatic Characterization of the Price-Money Message Mechanism," Discussion Papers in Economics and Business 15-31-Rev., Osaka University, Graduate School of Economics, revised Mar 2016.
    2. Ken Urai & Hiromi Murakami, 2016. "Local Independence, Monotonicity and Axiomatic Characterization of Price-Money Message Mechanism," Discussion Papers in Economics and Business 16-08, Osaka University, Graduate School of Economics.

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    More about this item

    Keywords

    Axiomatic Characterization; Resource Allocation Mechanism; Informational Efficiency; Monetary Equilibrium; Overlapping-Generations Model; Replica Core Equivalence; Universal Mapping Property;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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