Money and Prices: A Model of Search and Bargaining

Shouyong Shi

No 916, Working Paper from Economics Department, Queen's University

Abstract: This paper makes commodities divisible and incorporates bargaining into the search-theoretic model of money to determine the purchasing power of money (or price). It is shown that two monetary equilibria always coexist where flat money is universally accepted. The two equilibria differ in price, output, welfare and the velocity of money. Sunspot monetary equilibria exist in which money is universally accepted in all states of the economy. Multiplicity has novel implications on the effectiveness of currency substitution and exchange market intervention.

JEL-codes: C78 E40 (search for similar items in EconPapers)
Pages: 53 pages
Date: 1995-01
References: Add references at CitEc
Citations: View citations in EconPapers (294)

Downloads: (external link)
http://qed.econ.queensu.ca/working_papers/papers/qed_wp_916.pdf First version 1995 (application/pdf)

Related works:
Journal Article: Money and Prices: A Model of Search and Bargaining (1995)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:916

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().