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Asset dynamics, liquidity, and inequality in decentralized markets

Author

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  • Maurizio Iacopetta

    (Observatoire français des conjonctures économiques)

  • Raoul Minetti

    (Michigan State University)

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," Sciences Po publications info:hdl:2441/2bedunljk79, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/2bedunljk79gt86fbf15pvnnc5
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    References listed on IDEAS

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    Cited by:

    1. 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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