Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy
This study investigates which market structure gives rise to indeterminacy of stationary equilibria in a decentralized economy with non-degenerate distributions of money holdings. I develop a price-posting model with divisible money and then, examine two alternative markets: a pairwise random matching market and many-to-many exchange. Importantly, the former market balances the number of matched buyers and sellers by definition. As a result, indeterminacy arises under the pairwise matching while a unique equilibrium exists in the many-to-many market. This balancing assumption also leads to the indeterminacy in a Walrasian market.
|Affilication:||Hitotsubashi Institute for Advanced Study, Hitotsubashi University|
|Issued Date:||March 2019|
|Keywords:||search theory, money, indeterminacy|
|JEL:||D31, D51, D83, E41|
|Links:||PDF, HERMES-IR, RePEc|