Fiat money in the Kiyotaki-Wright model

S. Rao Aiyagari; Neil Wallace

doi:10.1007/BF01212470

Fiat money in the Kiyotaki-Wright model

S. Rao Aiyagari, Neil Wallace

Economics

Research output: Contribution to journal › Article › peer-review

27 Scopus citations

Abstract

We study versions of the Kiyotaki-Wright (1989) model with fiat money and show that: (1) The use of a low storage cost fiat money may be necessary for specialization and trade, (2) there can be valued fiat money steady states which are indeterminate, (3) there are no nontrivial steady-states in which all trades consist of fiat money for goods, (4) fiat money may be valued even if it is not the least costly-to-store object, and lastly, (5) two fiat monies with different storage costs may both be valued.

Original language	English (US)
Pages (from-to)	447-464
Number of pages	18
Journal	Economic Theory
Volume	2
Issue number	4
DOIs	https://doi.org/10.1007/BF01212470
State	Published - Dec 1992

All Science Journal Classification (ASJC) codes

Economics and Econometrics

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10.1007/BF01212470

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abstract = "We study versions of the Kiyotaki-Wright (1989) model with fiat money and show that: (1) The use of a low storage cost fiat money may be necessary for specialization and trade, (2) there can be valued fiat money steady states which are indeterminate, (3) there are no nontrivial steady-states in which all trades consist of fiat money for goods, (4) fiat money may be valued even if it is not the least costly-to-store object, and lastly, (5) two fiat monies with different storage costs may both be valued.",

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AB - We study versions of the Kiyotaki-Wright (1989) model with fiat money and show that: (1) The use of a low storage cost fiat money may be necessary for specialization and trade, (2) there can be valued fiat money steady states which are indeterminate, (3) there are no nontrivial steady-states in which all trades consist of fiat money for goods, (4) fiat money may be valued even if it is not the least costly-to-store object, and lastly, (5) two fiat monies with different storage costs may both be valued.

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Fiat money in the Kiyotaki-Wright model

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