Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy
Abstract:
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.
Report No.: | HIAS-E-84 |
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Author(s): | So Kubota |
Affiliation: | 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 |