A model of money with multilateral matching

We develop a model of decentralized monetary exchange to examine the distributional effects of inflation across heterogeneous agents. The agents have private information about their productivity, preferences, or money holdings. Matching is multilateral and each seller is visited by a stochastic numb...

Full description

Saved in:
Bibliographic Details
Published inJournal of monetary economics Vol. 55; no. 6; pp. 1054 - 1066
Main Authors Galenianos, Manolis, Kircher, Philipp
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.09.2008
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Monetary Economics
Subjects
Economic models
Equilibrium models
Inflation
Information economics
Monetary economics
Monetary models
Monetary policy
Money
Money markets
Money Private information Multilateral matching
Multilateral matching
Private information
Studies
E40
Money
Multilateral matching
Private information
Online AccessGet full text

Cover

More Information
Summary:We develop a model of decentralized monetary exchange to examine the distributional effects of inflation across heterogeneous agents. The agents have private information about their productivity, preferences, or money holdings. Matching is multilateral and each seller is visited by a stochastic number of buyers. The good is allocated according to a second-price auction in money. In equilibrium, homogeneous buyers hold different amounts of money leading to price dispersion. We find the closed-form solution for the distribution of money holdings. Entry of sellers is suboptimal except at the Friedman rule. Inflation acts as a regressive tax.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-3932
1873-1295
DOI:10.1016/j.jmoneco.2008.06.001