Minimum Consumption Requirements and Cycles in an Overlapping Generations Model of Money
Richard Barnett (),
Joydeep Bhattacharya () and
Staff General Research Papers Archive from Iowa State University, Department of Economics
This paper studies a pure-exchange monetary overlapping generations economy in which young and old agents face exogenous minimum consumption requirements, and money is the only asset. The presence of the minimum consumption requirement on the old is shown to produce multiperiodic monetary equilibria in which real balances cycle forever between "momentary" equilibrium points (those which generate monetary sequences that potentially violate equilibrium strictures asymptotically).
Keywords: overlapping generations model; cycles; monetary equilibria; minimum consumption requirements (search for similar items in EconPapers)
JEL-codes: E31 E42 E63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:12834
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