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Robustness of Stability to Cost of Carrying Money in a Matching Model of Money
- Authors
- Huang, Pidong
- Issue Date
- 5월-2015
- Publisher
- WUHAN UNIV JOURNALS PRESS
- Keywords
- Random matching model; Monetary steady state; Instability; Determinacy
- Citation
- ANNALS OF ECONOMICS AND FINANCE, v.16, no.1, pp.95 - 114
- Indexed
- SSCI
SCOPUS
- Journal Title
- ANNALS OF ECONOMICS AND FINANCE
- Volume
- 16
- Number
- 1
- Start Page
- 95
- End Page
- 114
- ISSN
- 1529-7373
- Abstract
- This paper studies stability of monetary steady states in a Trejos-Wright random matching model of money with the money holding set {0,1,2} and a cost of carrying money. Three steady states are generic: pure-strategy fullsupport steady state; mixed-strategy full-support steady state; and non-fullsupport steady state. Stability analysis shows that both full-support steady states are stable and determinate. The non-full-support steady state is stable and indeterminate if there is a sufficiently small positive carrying cost. The non-full-support steady state becomes unstable if the carrying cost is zero.
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