Perfectly competitive bilateral exchange without discounting
In a random-matching economy of traders who maximize cumulative consumption (overtaking criterion), the stationary, Markov, Bayesian-perfect equilibrium is studied. At such equilibrium, two results hold: (1) perfect substitutability between current and future consumption implies a no-surplus condition; and (2) by the no-surplus condition, there is a nominal price at which all trades must occur. These results strengthen the seminal results of Ostroy (1973) regarding monetary bilateral exchange in two ways: the incentive compatibility of the equilibrium trading pattern is established and a less roundabout trading pattern enhances welfare by enabling consumption to occur more frequently.
Year of publication: |
2010
|
---|---|
Authors: | Green, Edward J. ; Zhou, Ruilin |
Published in: |
Journal of Monetary Economics. - Elsevier, ISSN 0304-3932. - Vol. 57.2010, 2, p. 121-131
|
Publisher: |
Elsevier |
Subject: | Monetary bilateral exchange Random matching |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Sequential stratified sampling
Green, Edward J., (1994)
-
On the multiplicity of monetary equilibria : Green-Zhou meets Lagos-Wright
Jean, Kasie, (2010)
-
Money as a mechanism in a Bewley economy
Green, Edward J., (2005)
- More ...