Monetary Equilibrium with Missing Markets

Pradeep Dubey and John Geanakoplos ()
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John Geanakoplos: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/john-geanakoplos

No 1389, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We consider a two-period model with missing assets and missing market links, in which money plays a central role and is linked to every instrument in the economy. If there are enough missing market links relative to the ratio of outside to inside money, then monetary equilibrium (ME) exists and money has positive value. The nonexistence of GEI (of the underlying economy) shows up as a liquidity trap in terms of the ME. In sharp contrast to GEI, the ME are generally determinate not only in terms of real, but also financial, variables.

Keywords: Bank; Money; Monetary equilibrium; Incomplete markets; Inside money; Outside money; Liquidity trap (search for similar items in EconPapers)
JEL-codes: D50 E40 E50 E58 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2003-01
New Economics Papers: this item is included in nep-mon
Note: CFP 1063.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Published in Journal of Mathematical Economics (2003), 39(5-6): 585-618

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