Credit, Money and Asset Equilibria with Indivisible Goods

Han Han, Benoit Julien, Asgerdur Petursdottir and Liang Wang
Additional contact information
Han Han: School of Economics Peking University
Asgerdur Petursdottir: University of Bath

No 201601, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: In a New Monetarist framework, we study the trade of indivisible goods under credit, divisible money and divisible asset in a frictional market. We show how indivisibility on the goods side, instead of the money or asset side, matters for equilibria. The bargaining solution generates a price that is independent of nominal interest rate, dividend value of the asset, or the number of active buyers carrying the asset for liquidity purposes. To reestablish this link, we consider price posting with competitive search. We derive conditions under which stationary equilibrium exists. With asset and bargaining, we find that for negative dividend value on the asset, multiple equilibria occur. Otherwise, in all possible combinations of liquidity and price mechanisms, including positive dividend value under asset, the equilibrium is unique or generically unique.

Keywords: Nash Bargaining; Competitive Search; Indivisibility; Multiplicity; Uniqueness (search for similar items in EconPapers)
JEL-codes: D51 E40 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Credit, Money and Asset Equilibria with Indivisible Goods (2016)
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