The Distribution of Money and Prices in an Equilibrium with Lotteries
Authors:
- Aleksander BerentsenABAleksander Berentsen
- Gabriele CameraGCGabriele Camera
- Christopher J. WallerCWChristopher J. Waller
Preprint
- 1 January 2004
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
We construct a tractable model of divisible money and 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'. By studying a simple trading pattern, we can generate monetary distributions that match those observed in numerically simulated economies with fully divisible money and price heterogeneity.Keywords
All Related Versions
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