Efficient propagation of shocks and the optimal return on money

• 成果类型: Article
• 署名作者: Cavalcanti, Ricardo de O.; Erosa, Andres
• 署名单位: University of Toronto; Getulio Vargas Foundation
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2006.10.002
• 发表日期: 2008
• 页码: 128-148
• 关键词: search; money; cycles; optima; Propagation of shocks

摘要

We study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals. Because the economy features aggregate preference shocks, we apply a notion of implementability that allows for allocations with non-trivial business-cycle dynamics for the propagation of shocks. We show that history dependence is predicted by the theory of second best and becomes necessary for optimality when the degree of patience is neither too low nor too high. Our analysis concludes with a discussion of whether there is a role for the propagation of shocks in alternative economic environments. (C) 2006 Elsevier Inc. All rights reserved.