Endogenous buyer-seller choice and divisible money in search equilibrium

• 成果类型: Article
• 署名作者: Faig, Miquel
• 署名单位: University of Toronto
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2007.09.007
• 发表日期: 2008
• 页码: 184-199
• 关键词: Monetary search; divisible money; lotteries

摘要

In the Lagos-Wright model [R. Lagos, R. Wright, A unified framework for monetary theory and policy analysis, J. Polit. Economy 113 (2005) 463-484], the quasi-linear preferences assumption is not necessary to generate simple distributions of money holdings if individuals choose endogenously to go to the search market as buyers or as sellers. The non-convex buyer-seller choice provides an incentive for gambling in lotteries, and, as a result, the value function has a linear interval. As long as this interval is the relevant one for evaluating their future utilities, individuals behave as if their preferences were quasi-linear. In the stationary equilibrium, individuals remain inside this linear interval if the money supply does not decline. (C) 2007 Elsevier Inc. All rights reserved.