Stationarity without degeneracy in a model of commodity money |
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Authors: | R de O Cavalcanti Daniela Puzzello |
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Institution: | (1) Department of Business Administration and Economics, 119 Hartwell Hall, SUNY Brockport, Brockport, NY 14420, USA |
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Abstract: | We develop a model of macroeconomic heterogeneity inspired by the Kiyotaki–Wright (J Polit Econ 97:924–954, 1989) formulation
of commodity money, with the addition of linear utility and idiosyncratic shocks to savings. We consider two environments.
In the benchmark case, the consumer in a meeting is chosen randomly. In the auctions case, the individual holding more money can be selected to be the consumer. We show that in both environments socially optimal
trading decisions (that are individually acceptable) are stationary and solve a tractable static optimization problem. Savings
decisions in the benchmark case are remarkably invariant to mean-preserving changes in the distribution of shocks. This result
is overturned in the auctions case. |
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Keywords: | |
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