The instability of some non-full-support steady states in a random matching model of money

Pidong Huang, Yoske Igarashi

    Research output: Contribution to journalArticlepeer-review

    3 Citations (Scopus)

    Abstract

    Zhu (2003) shows existence of full-support monetary steady states with strictly concave value functions in a random matching model with individual money holdings in {0, 1, 2, . . .. , B} for a general B. He also shows that corresponding to each such steady state is an l-replica steady state for each l∈N: money is traded in bundles of l units, the support is {0, l, 2. l, . . .. , lB}, and the value function is a step-function with jumps at points of the support. We show that such l-replicas are unstable if the underlying full-support steady state is a pure strategy steady state and if the support of the initial distribution is not {0, l, 2. l, . . .. , lB}.

    Original languageEnglish
    Pages (from-to)177-185
    Number of pages9
    JournalJournal of Mathematical Economics
    Volume55
    Issue number1
    DOIs
    Publication statusPublished - 2014

    Bibliographical note

    Publisher Copyright:
    © 2014 Elsevier B.V.

    Keywords

    • Instability
    • Monetary steady state
    • Random matching model
    • Zhu (2003)

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Applied Mathematics

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