The distribution of money and prices in an equilibrium with lotteries

Berentsen, Aleksander, Camera, Gabriele and Waller, Christopher 2006, The distribution of money and prices in an equilibrium with lotteries. In Aliprantis, Charalambos D., Yannelis, Nicholas C. and Camera, Gabriele (ed), Recent Developments of Money and Finance : Exploring Links between Market Frictions, Financial Systems and Monetary Allocations, Springer-Verlag Berlin, Heidelberg, Germany, pp.173-193, doi: 10.1007/3-540-29500-3_9.

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Title The distribution of money and prices in an equilibrium with lotteries
Author(s) Berentsen, Aleksander
Camera, Gabriele
Waller, ChristopherORCID iD for Waller, Christopher orcid.org/0000-0003-2406-9910
Title of book Recent Developments of Money and Finance : Exploring Links between Market Frictions, Financial Systems and Monetary Allocations
Editor(s) Aliprantis, Charalambos D.
Yannelis, Nicholas C.
Camera, Gabriele
Publication date 2006
Series Studies in Economic Theory
Chapter number 4
Total chapters 6
Start page 173
End page 193
Total pages 21
Publisher Springer-Verlag Berlin
Place of Publication Heidelberg, Germany
Keyword(s) Social Sciences
Business, Finance
Economics
Business & Economics
RANDOM-MATCHING MODEL
MONETARY EXCHANGE
SEARCH
bilateral trading
extensive margin
price dispersion
money balance
money transfer
Summary We construct a tractable ‘fundamental’ model of money with equilibrium heterogeneity in money balances and prices. We do so by considering randomized monetary trades in a standard search-theoretic model of money where agents can hold multiple units of indivisible “tokens” and can offer lotteries on monetary transfers. By studying a simple trading pattern, we can analytically characterize the monetary distribution. Interestingly, such distributions match those observed in numerically simulated economies with fully divisible money and price heterogeneity.
ISBN 3-540-27803-6
978-3-540-27803-0
ISSN 1431-8849
Language eng
DOI 10.1007/3-540-29500-3_9
Indigenous content off
HERDC Research category B1.1 Book chapter
Copyright notice ©2006, Springer-Verlag Berlin
Persistent URL http://hdl.handle.net/10536/DRO/DU:30126263

Document type: Book Chapter
Collections: Faculty of Business and Law
Department of Economics
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