Distributional Aspects of the Divisibility of Money: An Example

9 Pages Posted: 23 Dec 2014

See all articles by Gabriele Camera

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Date Written: February 4, 2004

Abstract

I highlight the importance of the distributional aspects of money’s divisibility by comparing a search-theoretic model with random transfers of indivisible money balances, to one with deterministic transfers of partially divisible balances. Randomization allows price flexibility, as if money were fully divisible. Partial divisibility does not, but allows money redistributions. An example of the relevance of such ‘extensive margin’ aspects of divisibility is provided.

Keywords: Divisibility, Lotteries, Money distribution, Search

JEL Classification: D30, D83, E40

Suggested Citation

Camera, Gabriele, Distributional Aspects of the Divisibility of Money: An Example (February 4, 2004). Available at SSRN: https://ssrn.com/abstract=2541968 or http://dx.doi.org/10.2139/ssrn.2541968

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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