Money as a mechanism in a bewley economy

Edward J. Green, Ruilin Zhou

Research output: Contribution to journalArticlepeer-review

24 Scopus citations


We investigate the efficiency property of a monetary economy with spot trade. We prove a conjecture that is essentially due to Bewley (Models of Monetary Economics (1980); Econometrica 51 (1983), 1485-504). The gist is that monetary spot trading is nearly efficient ex ante in an environment where very patient agents can accumulate large enough money stocks to be completely self-insured. We also study examples where a nonmonetary mechanism is preferred ex ante to any monetary mechanism in a stationary environment, and where an inflationary monetary mechanism is preferred ex ante to a laissez-faire or deflationary monetary mechanism in an environment with impatient agents.

Original languageEnglish (US)
Pages (from-to)351-371
Number of pages21
JournalInternational Economic Review
Issue number2
StatePublished - May 2005

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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