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Money inventories in search equilibrium

Berentsen, Aleksander. (2000) Money inventories in search equilibrium. Journal of money, credit and banking, Vol. 32. S. 168-178.

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Official URL: http://edoc.unibas.ch/dok/A5250643

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Abstract

The paper relaxes the one unit storage capacity imposed in the basic search-theoretic model of fiat money with indivisible real commodities and indivisible money. Agents can accumulate as much money as they want. It characterizes the stationary distributions of money and shows that for reasonable parameter values (e.g. production cost, discounting, degree of specialization) a monetary equilibrium exists. There are multiple stationary distributions of a given amount of money, which differ in their welfare levels. Thus, a redistribution of money affects real economic variables in this model. The monetary equilibrium reveals two essential features of money. First, the marginal expected utility of money decreases. Second, there exists an endogenous upper bound on the money holdings: agents willingly produce and sell for money up to this bound and refuse to do so if their money holdings exceed this bound.
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:Ohio State University Press
ISSN:0022-2879
Note:Publication type according to Uni Basel Research Database: Journal article
Last Modified:22 Mar 2012 14:28
Deposited On:22 Mar 2012 14:03

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