Trejos–Wright with a 2-unit bound: Existence and stability of monetary steady states

Pidong Huang () and Yoske Igarashi

Mathematical Social Sciences, 2015, vol. 73, issue C, 55-62

Abstract: This paper investigates a Trejos–Wright random matching model of money with a consumer take-it-or-leave-it offer and with individual money holdings in the set {0,1,2}. It is shown that three kinds of monetary steady states exist generically: (1) pure-strategy full-support steady states, (2) mixed-strategy full-support steady states, and (3) non-full-support steady states. A full-support steady state exists if and only if a non-full-support steady state exists. Stability of these steady states is also studied. Both pure-strategy and mixed-strategy full-support steady states are locally stable. However, non-full-support steady states are unstable.

Date: 2015
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Related works:
Working Paper: Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states (2013)
Working Paper: Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states (2013)
Working Paper: Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:73:y:2015:i:c:p:55-62

DOI: 10.1016/j.mathsocsci.2014.11.004

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