TY - JOUR
T1 - Does commodity money eliminate the indeterminacy of equilibrium?
AU - Zhou, Ruilin
N1 - Funding Information:
I thank the National Science Foundation for financial support. The views expressed herein are those of the author and not necessarily those of the Federal Reserve Bank of Chicago or the Federal Reserve System.
PY - 2003/5/1
Y1 - 2003/5/1
N2 - Previous studies have shown that a random-matching model with divisible flat money and without constraint on agents' money inventories possesses a continuum of stationary single-price equilibria. Wallace (J. Econom. Theory 81 (1998) 223) conjectures that the indeterminacy can be eliminated by the use of commodity money. Instead, I find that in a similar random-matching model with dividend-yielding commodity money, a continuum of stationary single-price equilibria exists when the utility of dividend is not too high. This result casts doubt on the conventional belief that the indeterminacy of monetary equilibrium is be caused only by the nominal nature of money.
AB - Previous studies have shown that a random-matching model with divisible flat money and without constraint on agents' money inventories possesses a continuum of stationary single-price equilibria. Wallace (J. Econom. Theory 81 (1998) 223) conjectures that the indeterminacy can be eliminated by the use of commodity money. Instead, I find that in a similar random-matching model with dividend-yielding commodity money, a continuum of stationary single-price equilibria exists when the utility of dividend is not too high. This result casts doubt on the conventional belief that the indeterminacy of monetary equilibrium is be caused only by the nominal nature of money.
UR - http://www.scopus.com/inward/record.url?scp=0038348007&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0038348007&partnerID=8YFLogxK
U2 - 10.1016/S0022-0531(03)00007-3
DO - 10.1016/S0022-0531(03)00007-3
M3 - Article
AN - SCOPUS:0038348007
SN - 0022-0531
VL - 110
SP - 176
EP - 190
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 1
ER -