An Axiomatic Characterization of the Price-Money Message Mechanism

Ken Urai () and Hiromi Murakami ()
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Ken Urai: Graduate School of Economics, Osaka University
Hiromi Murakami: Graduate School of Economics, Osaka University

No 15-31-Rev., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: The axiomatic characterization of price or market equilibrium is one of the most important problems in the general equilibrium theory. There does not seem to exist, however, so many papers on the axiomatic characterization problem of monetary equilibrium. The overlapping-generations model with a double in nity of commodities and agents is one of the most fundamental frameworks for introducing money into an economic model, although a simple game-theoretic or welfare characterization on the role of money under competitive mechanism is widely known to be difficult. In this paper, we show that the informational efficiency axiomatic characterization as in Hurwicz (1960), Mount and Reiter (1974) and Sonnenschein (1974) is possible for the price-money competitive mechanism for overlapping- generations economies among the class of all allocation mechanisms with messages. In particular, the category theoretic universal mapping characterization in Sonnenschein (1974) is generalized and applied to the overlapping-generations framework through our monetary version of Debreu-Scarf's core limit theorem of Urai and Murakami (2015). Our argument is also closely related to the replica characterization approaches of Walrasian social choice mechanism like Thomson (1988) and Nagahisa (1994), and provides a comprehensive perspective on them.

Keywords: Axiomatic Characterization; Resource Allocation Mechanism; Informational Efficiency; Monetary Equilibrium; Overlapping-Generations Model; Replica Core Equivalence; Universal Mapping Property (search for similar items in EconPapers)
JEL-codes: C60 C71 D51 D82 E00 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2015-12, Revised 2016-03
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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