A Stability Analysis of a Multiple Denomination Equilibrium
- Authors
- Huang, Pidong
- Issue Date
- 2015
- Publisher
- SEOUL NATL UNIV, INST ECONOMIC RESEARCH
- Keywords
- Random matching model; Carrying cost; Denomination; Instability; Determinacy
- Citation
- SEOUL JOURNAL OF ECONOMICS, v.28, no.4, pp.389 - 414
- Indexed
- SCOPUS
KCI
- Journal Title
- SEOUL JOURNAL OF ECONOMICS
- Volume
- 28
- Number
- 4
- Start Page
- 389
- End Page
- 414
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/96393
- ISSN
- 1225-0279
- Abstract
- We consider existence and stability in a simple version of Lee et al. (2005). For a sufficiently large discount factor, a steady state of full. support wealth distribution and pure strategy exists, whereas for an intermediate discount factor, a steady state of mixed strategy exists. Both steady states are locally stable and determinate. All de-nominations are circulated in the mixed-strategy steady state, whereas larger denominations are not held in the other steady state. We also show that nonfull-support steady states exist, and are stable and in-determinate. This finding is in sharp contrast to that of Huang, and Igarashi (2014), which show instability of nonfull-support steady states in Lee et al. (2005)
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