Trejos-Wright with a 2-unit bound: existence and stability of monetary steady states

Economics

Speaker:	Yosuke Igarashi, University of Exeter
Date:	Wednesday 25 September 2013
Time:	16.00
Location:	Matrix Lecture Theatre, Building One

Further details

This paper investigates in detail a Trejos-Wright random matching model of money with a consumer take-it-or-leave-it offer and the individual money holding set {0, 1, 2}. It is shown that three kinds of monetary steady state exist generically: (1) pure-strategy full-support steady states, (2) mixed-strategy full-support steady states, and (3) non-full-support steady states. A full-support steady state exists if and only if a non-full-support steady state exists. Both pure-strategy and mixed-strategy full-support steady states are locally stable. Non-full-support steady states are unstable