Existence of steady states with positive consumption in the kiyotaki-wright model

S. Rao Aiyagari, Neil Wallace

Research output: Contribution to journalArticlepeer-review

48 Scopus citations

Abstract

We prove the general existence of steady states with positive consumption in an N goods and fiat money version of the Kiyotaki-Wright model by admitting mixed strategies. We also show that there always exists a steady state in which everyone accepts a least costly-to-store object. In particular, if fiat money is one such object, then there always exists a monetary steady state. We also establish some other properties of steady states and comment on the relationship between steady states and (incentive) feasible allocations.

Original languageEnglish (US)
Pages (from-to)901-916
Number of pages16
JournalReview of Economic Studies
Volume58
Issue number5
DOIs
StatePublished - Oct 1 1991

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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