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

Pidong Huang () and Yoske Igarashi

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate in details a Trejos-Wright random matching model of money with a consumer take-it-or-leave-it offer and the individual money holding set {0,1,2}. First we show generic existence of three kinds of steady states: (1) pure-strategy full-support steady states, (2) mixed-strategy full-support steady states, and (3) non-full-support steady states, and then we show relations between them. Finally we provide stability analyses. It is shown that (1) and (2) are locally stable, (1) being also determinate. (3) is shown to be unstable.

Keywords: random matching model; monetary steady state; local stability; determinacy; instability; Zhu (2003). (search for similar items in EconPapers)
JEL-codes: E00 (search for similar items in EconPapers)
Date: 2013-04-16
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 (1)

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Related works:
Journal Article: Trejos–Wright with a 2-unit bound: Existence and stability of monetary steady states (2015) Downloads
Working Paper: Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states (2013) Downloads
Working Paper: Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states (2013) Downloads
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