A BEJM Topics article.

Abstract

I study money creation in versions of the Trejos-Wright (1995) and Shi (1995) models with indivisible money and individual holdings bounded at two units. I work with the same class of policies as in Deviatov and Wallace (2001), who study money creation in that model. However, I consider an alternative notion of implementability - the ex ante pairwise core. I compute a set of numerical examples to determine whether money creation is beneficial. I find beneficial effects of money creation if individuals are sufficiently risk averse (obtain sufficiently high utility gains from trade) and impatient.

Submitted: September 12, 2006 · Accepted: November 8, 2006 · Published: December 20, 2006

Originally published in Topics in Macroeconomics.

Recommended Citation

Deviatov, Alexei (2006) "Money Creation in a Random Matching Model," Topics in Macroeconomics: Vol. 6 : Iss. 3, Article 5.
Available at: http://www.bepress.com/bejm/topics/vol6/iss3/art5