Money, Credit, and Allocation Under Complete Dynamic Contracts and Incomplete Markets
S. Aiyagari and
Stephen Williamson ()
Game Theory and Information from EconWPA
We construct a dynamic heterogeneous-agent model with random uninsurable endowments. Two allocation mechanisms are considered, one with long-term complete credit arrangements under private information, and one with incomplete competitive markets. A role for money arises due to random limited participation. A Friedman rule is optimal in the first economy, and replicates a pure credit arrangement in the second. Computational results show that steady state allocations are quite different under the two arrangements, though the responses to changes in long-run inflation are similar.
Keywords: 97-20 (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Note: Type of Document - PDF; prepared on Acrobat PDF; pages: 43 ; figures: included
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Working Paper: Money, Credit, and Allocation Under Complete Dynamic Contracts and Incomplete Markets (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:9802003
Access Statistics for this paper
More papers in Game Theory and Information from EconWPA
Series data maintained by EconWPA ().