TY - JOUR
T1 - Equilibrium using credit or money with indivisible goods
AU - Han, Han
AU - Julien, Benoit
AU - Petursdottir, Asgerdur
AU - Wang, Liang
PY - 2016/11/1
Y1 - 2016/11/1
N2 - This note studies the trade of indivisible goods using credit or money in a frictional market. We show how indivisibility matters for monetary equilibrium under different assumptions about price determination. Bargaining generates a price and allocation that are independent of the nominal interest or inflation rate over some range. This is not the case with price posting and directed search. In either case, we provide conditions (the nominal rate cannot be too high) under which stationary monetary equilibrium exists, and we show it is unique or generically unique.
AB - This note studies the trade of indivisible goods using credit or money in a frictional market. We show how indivisibility matters for monetary equilibrium under different assumptions about price determination. Bargaining generates a price and allocation that are independent of the nominal interest or inflation rate over some range. This is not the case with price posting and directed search. In either case, we provide conditions (the nominal rate cannot be too high) under which stationary monetary equilibrium exists, and we show it is unique or generically unique.
UR - http://dx.doi.org/10.1016/j.jet.2016.08.007
U2 - 10.1016/j.jet.2016.08.007
DO - 10.1016/j.jet.2016.08.007
M3 - Article
SN - 0022-0531
VL - 166
SP - 152
EP - 163
JO - Journal of Economic Theory
JF - Journal of Economic Theory
ER -