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Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy

So Kubota

No HIAS-E-84, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: This study investigates which market structure gives rise to indeterminacy of stationary equilibria in a decentralized economy with non-degenerate distributions of money holdings. I develop a price-posting model with divisible money and then, examine two alternative markets: a pairwise random matching market and a many-to-many exchange. Importantly, the former market balances the number of matched buyers and sellers by definition. As a result, indeterminacy arises under the pairwise matching while a unique equilibrium exists in the many-to-many market. This balancing assumption also leads to the indeterminacy in a Walrasian market.

Keywords: search theory; money; indeterminacy (search for similar items in EconPapers)
JEL-codes: D31 D51 D83 E41 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2019-03
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-84

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