IDEAS home Printed from https://ideas.repec.org/p/van/wpaper/0022.html
   My bibliography  Save this paper

Money and Prices in a Multiple Matching Decentralized Trading Model

Author

Listed:
  • Derek Laing

    (Department of Economics, State College, PA)

  • Victor Li

    (Department of Economics, Princeton University)

  • Ping Wang

    (Department of Economics, Vanderbilt University)

Abstract

We study price determination and exchange patterns in a monopolistically competitive economy, in which both goods and (fiat) money are perfectly divisible. The decentralized trading environment features 'multiple matches,' in which households consume bundles of commodities and have a preference for consumption variety. Although each household contacts many sellers, the variety of the consumption basket that results under barter mediated exchange is sparser than that obtained with monetary exchange. In the latter setting, households need only to locate a good they want, while in the former the more stringent double coincidence of wants must be satisfies. We examine pricing and consider the effects of monetary policy. We show that a sufficiently rapid expansion of the money supply leads to the gradual emergence of barter. Under these circumstances sellers accept both goods and cash payments and workers receive part of their remuneration in kind.

Suggested Citation

  • Derek Laing & Victor Li & Ping Wang, 2000. "Money and Prices in a Multiple Matching Decentralized Trading Model," Vanderbilt University Department of Economics Working Papers 0022, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0022
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/VUECON/vu00-w22.pdf
    File Function: First version, 2000
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Search; fiat money; barter; neutrality;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: http://www.vanderbilt.edu/econ/wparchive/index.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.