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Equilibrium using credit or money with indivisible goods

Han Han, Benoit Julien (), Asgerdur Petursdottir and Liang Wang

Journal of Economic Theory, 2016, vol. 166, issue C, 152-163

Abstract: This note studies the trade of indivisible goods using credit or money in a frictional market. We show how indivisibility matters for monetary equilibrium under different assumptions about price determination. Bargaining generates a price and allocation that are independent of the nominal interest or inflation rate over some range. This is not the case with price posting and directed search. In either case, we provide conditions (the nominal rate cannot be too high) under which stationary monetary equilibrium exists, and we show it is unique or generically unique.

Keywords: Bargaining; Competitive search; Indivisibility; Uniqueness (search for similar items in EconPapers)
JEL-codes: D51 E40 (search for similar items in EconPapers)
Date: 2016
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