A simple search model of money with heterogeneous agents and partial acceptability

Andrei Shevchenko () and Randall Wright
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Andrei Shevchenko: Michigan State University

A chapter in Recent Developments on Money and Finance, 2006, pp 223-232 from Springer

Abstract: Summary Simple search models have equilibria where some agents accept money and others do not. We argue such equilibria should not be taken seriously. This is unfortunate if one wants a model with partial acceptability. We introduce heterogeneous agents and show partial acceptability arises naturally and robustly. There can be multiple equilibria with different degrees of acceptability. Given the type of heterogeneity we allow, the model is simple: equilibria reduce to fixed points in [0, 1]. We show that with other forms of heterogeneity equilibria are fixed points in set space, and there is no method to reduce this to a problem in R 1.

Keywords: Multiple Equilibrium; Storage Cost; Monetary Economic; Heterogeneous Agent; Money Holding (search for similar items in EconPapers)
Date: 2006
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Journal Article: A simple search model of money with heterogeneous agents and partial acceptability (2004)
Working Paper: A simple search model of money with heterogeneous agents and partial acceptability (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:spr:steccp:978-3-540-29500-6_11

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DOI: 10.1007/3-540-29500-3_11

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