Two Monetary Models with Alternating Markets

Gabriele Camera and YiLi Chien

Working Papers from Chapman University, Economic Science Institute

Abstract: We examine two monetary models with periodic interactions in centralized and decentralized markets: the cash-in-advance model and the model in Lagos and Wright (2005). Given conformity of preferences, technologies and shocks, both models reduce to a single di?erence equation. In stationary equilibrium, such equations coincide when the price distortion present in one model, due to Nash bargaining, is replicated in the other using a tax on cash revenues. In that case, the quantitative implications for the welfare cost of in?ation in each model are also comparable. Di?erences in the model’s performance reduce to di?erences in the pricing mechanism assumed to govern those transactions that must be settled with the exchange of cash.

Keywords: cash-in-advance; matching; microfoundations; money; in?ation (search for similar items in EconPapers)
JEL-codes: E1 E4 E5 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Two Monetary Models with Alternating Markets (2016)
Working Paper: Two monetary models with alternating markets (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:13-25

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