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Economic Theory

, Volume 2, Issue 4, pp 447–464 | Cite as

Fiat money in the Kiyotaki-Wright model

  • S. Rao Aiyagari
  • Neil Wallace
Research Articles

Summary

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.

Keywords

Steady State Economic Theory Storage Cost Fiat Money 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. Aiyagari, S.R., Wallace, N.: Existence of steady states with positive consumption in the Kiyotaki-Wright Model. Rev. Econ. Stud.58, 901–916 (1991)Google Scholar
  2. Kehoe, T., Kiyotaki, N., Wright, R.: More on money as a medium of exchange. Research Department Working Paper 443, Federal Reserve Bank of Minneapolis, 1990Google Scholar
  3. Kiyotaki, N., Wright, R.: On money as a medium of exchange. J. Polit. Econ.97, 927–954 (1989)Google Scholar
  4. Kiyotaki, N., Wright, R.: A contribution to the pure theory of money. J. Econ. Theory53, 215–235 (1991)Google Scholar
  5. Matsuyama, K., Kiyotaki, N., Matsui, A.: Toward a theory of international currency. Discussion Paper 931, Department of Economics, Northwestern University, 1991Google Scholar

Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • S. Rao Aiyagari
    • 1
  • Neil Wallace
    • 1
  1. 1.Federal Reserve Bank of MinneapolisMinneapolisUSA

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