The Distribution of Money and Prices in an Equilibrium with Lotteries

Aleksander Berentsen (), Gabriele Camera () and Christopher Waller ()

No 174, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: We construct a tractable model of divisible money and equilibrium heterogeneity in money balances and prices. We do so by considering randomized monetary trades in a standard search-theoretic model of money where agents can hold multiple units of indivisible 'tokens'. By studying a simple trading pattern, we can generate monetary distributions that match those observed in numerically simulated economies with fully divisible money and price heterogeneity.

Keywords: Money; Search; Lotteries; Price Dispersion; Wealth Distribution (search for similar items in EconPapers)
JEL-codes: E40 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mic and nep-mon
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Related works:
Journal Article: The distribution of money and prices in an equilibrium with lotteries (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:zur:iewwpx:174

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