A tractable model of monetary exchange with ex-post heterogeneity

Guillaume Rocheteau (), Pierre-Olivier Weill and Russell Wong
Additional contact information
Guillaume Rocheteau: Department of Economics, University of California, Irvine

Theoretical Economics, 2018, vol. 13, issue 3

Abstract: We construct a continuous-time, New-Monetarist economy that displays an endogenous, non-degenerate distribution of money holdings. Properties of equilibria are obtained analytically and equilibria are solved in closed form in a variety of cases. Lump-sum transfers financed with money creation are welfare-enhancing when labor productivity is low whereas regressive transfers approach first best when labor productivity is high and agents are not too impatient. We introduce illiquid government bonds and draw implications for liquidity-trap equilibria. We also study transitional dynamics under quadratic preferences and the velocity of money under heterogeneous preference shocks.

Keywords: Money; inflation; risk sharing; liquidity traps (search for similar items in EconPapers)
JEL-codes: E40 E50 (search for similar items in EconPapers)
Date: 2018-10-04
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20181369/21833/660 (application/pdf)

Related works:
Working Paper: A Tractable Model of Monetary Exchange with Ex-Post Heterogeneity (2017)
Working Paper: A Tractable Model of Monetary Exchange with Ex-post Heterogeneity (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:2821

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Todd D. Sarver, Juuso Toikka, Rakesh Vohra, Pierre-Olivier Weill

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().