A Monetary Equilibrium Model with Transactions Costs

A Monetary Equilibrium Model with Transactions Costs

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Equilibrium with Non-Convex Transactions Costs: Monetary and Non-Monetary Economies

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Monetary general equilibrium with transaction costs

Commodity money arises endogenously in a general equilibrium model with separate budget constraints for each transaction. Transaction costs imply differing bid and ask (selling and buying) prices. The most liquid good—with the smallest proportionate bid/ask spread—becomes commodity money. General equilibrium may not be Pareto efficient. If zero-transaction-cost money is available then the equil...

Why Is There Money? Convergence to a Monetary Equilibrium in a General Equilibrium Model with Transaction Costs by Ross

This paper presents a class of examples where a nonmonetary economy converges in a tatonnement process to a monetary equilibrium. Exchange takes place in organized markets characterized by an array of trading posts where each pair of goods may be traded for one another. A barter equilibrium with m commodities is characterized by m(m-1)/2 commodity pair trading posts, most of which host active t...

Monetary Union Its Costs