The distribution of money and prices in an equilibrium with lotteries

Aleksander Berentsen, Gabriele Camera and Christopher Waller ()
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Christopher Waller: University of Notre Dame

A chapter in Recent Developments on Money and Finance, 2006, pp 173-193 from Springer

Abstract: Summary We construct a tractable ‘fundamental’ model of money with equilibrium heterogeneity in money balances and prices. We do so by considering randomized monetary trades in a standard search-theoretic model of money where agents can hold multiple units of indivisible “tokens” and can offer lotteries on monetary transfers. By studying a simple trading pattern, we can analytically characterize the monetary distribution. Interestingly, such distributions match those observed in numerically simulated economies with fully divisible money and price heterogeneity.

Keywords: Bilateral Trading; Extensive Margin; Price Dispersion; Money Balance; Money Transfer (search for similar items in EconPapers)
Date: 2006
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Related works:
Journal Article: The distribution of money and prices in an equilibrium with lotteries (2004)
Working Paper: The Distribution of Money and Prices in an Equilibrium with Lotteries
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Persistent link: https://EconPapers.repec.org/RePEc:spr:steccp:978-3-540-29500-6_9

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DOI: 10.1007/3-540-29500-3_9

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