Commodity money with frequent search

Ezra Oberfield and Nicholas Trachter

Journal of Economic Theory, 2012, vol. 147, issue 6, 2332-2356

Abstract: A prominent feature of the Kiyotaki–Wright model of commodity money is multiplicity of dynamic equilibria. We show that the extent of multiplicity hinges on the frequency of search. Holding fixed the average number of meetings over time, we vary search frequency by altering the interval between search opportunities. To isolate the role of search frequency, we focus on symmetric equilibria in a symmetric environment. For each frequency we characterize the entire set of payoffs, strategies, and dynamic paths consistent with equilibrium. Indexed by these features, as search frequency increases the set of equilibria converges uniformly to a unique limiting equilibrium.

Keywords: Commodity money; Search; Multiple equilibria; Sunspots (search for similar items in EconPapers)
JEL-codes: C73 D83 E00 E40 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: Commodity Money with Frequent Search (2010)
Working Paper: Commodity money with frequent search (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:6:p:2332-2356

DOI: 10.1016/j.jet.2012.09.013

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