TY - JOUR
T1 - Real Indeterminacy of Stationary Monetary Equilibria in Centralized Economies
AU - Kamiya, Kazuya
AU - Kubota, So
AU - Nakajima, Kayuna
N1 - Funding Information:
We are grateful to three anonymous referees, and to Kenichi Fukushima, Etsuro Shioji, Chris A. Sims and Randall Wright for valuable comments. We thank the participants of the Mathematical Economics Monday Seminar at Keio University, the Macro Lunch Seminar at Hitotsubashi University, the Theory Seminar at Kobe University, the International Young Economists Conference at Osaka University, the Third Search Theory Conference at Hokkaido University and the Macro Study Group Meeting at the University of Wisconsin. This work is supported by JSPS KAKENHI Grant Numbers 16H03596 and 16K13349. So Kubota and Kayuna Nakajima acknowledge financial support from The Nakajima Foundation.
Publisher Copyright:
© 2017 Japanese Economic Association
PY - 2017/12
Y1 - 2017/12
N2 - We show that real indeterminacy of stationary equilibria, by which the set of stationary equilibria is a continuum and the real allocation varies among equilibria, may arise in some general equilibrium models with fiat money. The conditions under which such equilibria arise are: (i) each household optimally saves a constant amount of money; and (ii) at least two households face different budget constraints. We present various models, including a decentralized money search model and a centralized model with a monopoly firm, to explain how these conditions lead to real indeterminacy. Finally, we present a policy that uniquely implements any desirable outcome.
AB - We show that real indeterminacy of stationary equilibria, by which the set of stationary equilibria is a continuum and the real allocation varies among equilibria, may arise in some general equilibrium models with fiat money. The conditions under which such equilibria arise are: (i) each household optimally saves a constant amount of money; and (ii) at least two households face different budget constraints. We present various models, including a decentralized money search model and a centralized model with a monopoly firm, to explain how these conditions lead to real indeterminacy. Finally, we present a policy that uniquely implements any desirable outcome.
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U2 - 10.1111/jere.12145
DO - 10.1111/jere.12145
M3 - Article
AN - SCOPUS:85016501552
SN - 1352-4739
VL - 68
SP - 497
EP - 520
JO - Japanese Economic Review
JF - Japanese Economic Review
IS - 4
ER -