Purchase - $38.00

Money Holdings, Inflation, and Welfare in a Competitive Market

17 Pages Posted: 27 Apr 2011  

Scott J. Dressler

Villanova University - School of Business - Economics

Date Written: May 2011

Abstract

This article examines an environment where money is essential and agents exchange in perfectly competitive, Walrasian markets. Agents consume and produce a homogeneous good, but hold money to purchase consumption in the event of a relatively low productivity shock. A Walrasian market delivers a nondegenerate distribution of money holdings across agents and avoids some of the computational difficulties associated with the market assumption of bilateral bargaining common to search-theoretic environments. The model is calibrated to long-run U.S. velocity, and the welfare costs of inflation are assessed for variable buyer-seller ratios and persistent states of buying and selling.

Suggested Citation

Dressler, Scott J., Money Holdings, Inflation, and Welfare in a Competitive Market (May 2011). International Economic Review, Vol. 52, Issue 2, pp. 407-423, 2011. Available at SSRN: https://ssrn.com/abstract=1824053 or http://dx.doi.org/10.1111/j.1468-2354.2011.00633.x

Scott J. Dressler (Contact Author)

Villanova University - School of Business - Economics ( email )

800 Lancaster Avenue
Villanova, PA 19085-1678
United States

Paper statistics

Downloads
2
Abstract Views
153