Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy

This study investigates which market structure gives rise to indeterminacy of stationary equilibria in a decentralized economy with non-degenerate distributions of money holdings. I develop a price-posting model with divisible money and then, examine two alternative markets: a pairwise random matching market and a many-to-many exchange. Importantly, the former market balances the number of matched buyers and sellers by definition. As a result, indeterminacy arises under the pairwise matching while a unique equilibrium exists in the many-to-many market. This balancing assumption also leads to the indeterminacy in a Walrasian market.

Hitotsubashi Institute for Advanced Study, Hitotsubashi University

2019-03

English(eng)

technical report

VoR

29

I also acknowledge financial support from The Nakajima Foundation.

Discussion paper series / Hitotsubashi Institute for Advanced Study, Hitotsubashi University

https://hdl.handle.net/10086/30105