Accounting for Debasements: Indivisibility or Imperfect Recognizability of Money
In: Economic Inquiry, Band 58, Heft 1, S. 374-385
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In: Economic Inquiry, Band 58, Heft 1, S. 374-385
SSRN
In: Journal of economic dynamics & control, Band 137, S. 104329
ISSN: 0165-1889
In: Bajaj , A , Hu , T W , Rocheteau , G & Silva , M R 2017 , ' Decentralizing constrained-efficient allocations in the Lagos–Wright pure currency economy ' , Journal of Economic Theory , vol. 167 , pp. 1-13 . https://doi.org/10.1016/j.jet.2016.09.011
This paper offers two ways to decentralize the constrained-efficient allocation of the Lagos–Wright (2005) pure currency economy. The first way has divisible money, take-it-or-leave-it offers by buyers, and a transfer scheme financed by money creation. If agents are sufficiently patient, the first best is achieved for finite money growth rates. If agents are impatient, the equilibrium allocation approaches the constrained-efficient allocation asymptotically as the money growth rate tends to infinity. The second way has indivisible money, take-it-or-leave-it offers by buyers, and no government intervention. We discuss the strict implementation of constrained-efficient allocations and the applicability of our scheme to economies with Lucas trees, endogenous participation, match-specific heterogeneity, and sequential competitive markets.
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