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The distribution of money and prices in an equilibrium with lotteries

Berentsen, A. and Camera, G. and Waller, C.. (2004) The distribution of money and prices in an equilibrium with lotteries. Economic theory, Vol. 24, H. 4. S. 887-906.

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Official URL: http://edoc.unibas.ch/dok/A5249086

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Abstract

We construct a tractable `fundamental` model of money with equilibrium heterogeneity in money balances and prices. We do so by considering randomized monetary trades in a standard search-theoretic model of money where agents can hold multiple units of indivisible `tokens` and can offer lotteries on monetary transfers. By studying a simple trading pattern, we can analytically characterize the monetary distribution. Interestingly, such distributions match those observed in numerically simulated economies with fully divisible money and price heterogeneity.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Wirtschaftstheorie (Berentsen)
UniBasel Contributors:Berentsen, Aleksander
Item Type:Article, refereed
Bibsysno:Link to catalogue
Publisher:Springer International
ISSN:0938-2259
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:22 Mar 2012 14:28
Deposited On:22 Mar 2012 14:03

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