Economic Theory

, Volume 3, Issue 2, pp 297–314 | Cite as

More on money as a medium of exchange

  • Timothy J. Kehoe
  • Nobuhiro Kiyotaki
  • Randall Wright
Research Articles

Summary

We extend the analysis of Kiyotaki and Wright, who study economies where the commodities that serve as media of exchange (or, commodity money) are determined endogenously. Kiyotaki and Wright consider only steady-state, pure-strategy equilibria; here we allow dynamic and mixed-strategy equilibria. We demonstrate that symmetric, steady-state equilibria in mixed-strategies always exist, while sometimes no such equilibria exist in pure-strategies. We prove that the number of symmetric steady-state equilibria is generically finite. We also show, however, that for some parameter values there exists a continuum of dynamic equilibria. Further, some equilibria display cycles.

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Copyright information

© Springer-Verlag 1993

Authors and Affiliations

  • Timothy J. Kehoe
    • 1
    • 2
  • Nobuhiro Kiyotaki
    • 1
    • 2
  • Randall Wright
    • 2
    • 3
  1. 1.Department of EconomicsUniversity of MinnesotaMinneapolisUSA
  2. 2.Research DepartmentFederal Reserve Bank of MinneapolisMinneapolisUSA
  3. 3.Department of EconomicsUniversity of PennsylvaniaPhiladelphiaUSA

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