Fiat money in the Kiyotaki-Wright model

S. Rao Aiyagari, Neil Wallace

Research output: Contribution to journalArticlepeer-review

26 Scopus citations

Abstract

We study versions of the Kiyotaki-Wright (1989) model with fiat money and show that: (1) The use of a low storage cost fiat money may be necessary for specialization and trade, (2) there can be valued fiat money steady states which are indeterminate, (3) there are no nontrivial steady-states in which all trades consist of fiat money for goods, (4) fiat money may be valued even if it is not the least costly-to-store object, and lastly, (5) two fiat monies with different storage costs may both be valued.

Original languageEnglish (US)
Pages (from-to)447-464
Number of pages18
JournalEconomic Theory
Volume2
Issue number4
DOIs
StatePublished - Dec 1 1992

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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