On the multiplicity of monetary equilibria Green–Zhou meets Lagos–Wright》.pdfVIP

Journal of Economic Theory 145 (2010) 392–401 /locate/jet Note On the multiplicity of monetary equilibria: Green–Zhou meets Lagos–Wright ✩ a a a,b,∗ Kasie Jean , Stanislav Rabinovich , Randall Wright a University of Pennsylvania, United States b University of Wisconsin-Madison, United States Received 11 September 2008; final version received 13 January 2009; accepted 5 March 2009 Available online 15 July 2009 Abstract Green and Zhou relax the assumption, made in early search-based models of monetary exchange, of indivisible money. Their paper and various extensions make much technical progress, and derive some interesting substantive results. In particular, they show there is an indeterminacy of steady-state monetary equilibria. We reconsider this result in the framework of Lagos and Wright, which is more tractable. We show that a similar multiplicity arises, and is much easier to derive and understand. We also compare the results to those in related nonmonetary models, and discuss how they depend on details, including the number of agents and the timing. © 2009 Elsevier Inc. All rights reserved. JEL classification: D51; E40 Keywords: Money; Search; Indeterminacy; Multiplicity 1. Introduction Green and Zhou [12] make a contribution to monetary economics by showing how to relax the assumption of indivisible money in search-based models along the lines of Kiyotaki and ✩ We thank Ricardo Lagos, Ed Green, Neil Wallace, and especially Phili