A matching model with bounded holdings of indivisible money

Alexander Taber, Neil Wallace

Research output: Contribution to journalArticle

16 Scopus citations

Abstract

Recent versions of pairwise random matching models of money with divisible and perishable goods are amended to allow individuals to hold more than one unit of an indivisible asset. The asset resembles a fiat asset, except that nominal holdings of it yield a small amount of utility. There is a general upper bound on the number of units of the asset that individuals can hold. A steady state with trade is shown to exist. The model is applied to study numerically the effect on welfare of the degree to which the asset is divisible.

Original languageEnglish (US)
Pages (from-to)961-984
Number of pages24
JournalInternational Economic Review
Volume40
Issue number4
DOIs
StatePublished - Nov 1999

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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