A monetary theory with non-degenerate distributions

Guido Menzio, Shouyong Shi and Hongfei Sun

Journal of Economic Theory, 2013, vol. 148, issue 6, 2266-2312

Abstract: We construct and analyze a tractable search model of money with a non-degenerate distribution of money holdings. Analytical tractability comes from modeling decentralized exchange as directed search, which makes the monetary steady state block recursive. By adapting lattice-theoretic techniques, we characterize individualsʼ policy and value functions, and show that these functions satisfy the standard conditions of optimization. We prove that a unique monetary steady state exists and provide conditions under which the steady-state distribution of buyers over money balances is non-degenerate. Moreover, we analyze the properties of this distribution.

Keywords: Money; Distribution; Search; Lattice-theoretic (search for similar items in EconPapers)
JEL-codes: C6 E00 E4 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Related works:
Working Paper: A Monetary Theory with Non-degenerate Distributions (2013)
Working Paper: A Monetary Theory with Non-Degenerate Distributions (2011)
Working Paper: A Monetary Theory With Non-degenerate Distributions (2011)
Working Paper: A Monetary Theory with Non-Degenerate Distributions (2011)
Working Paper: A Monetary Theory with Non-Degenerate Distributions (2010)
Working Paper: Monetary Theory with Non-degenerate Distributions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:148:y:2013:i:6:p:2266-2312

DOI: 10.1016/j.jet.2013.07.020

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