Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-52001
Berentsen, Aleksander; Rocheteau, Guillaume (2002). On the Efficiency of Monetary Exchange: How Divisibility of Money Matters. Working paper series / Institute for Empirical Research in Economics No. 101, University of Zurich.
"We use alternative assumptions about the divisibility of goods and money and thenability of agents to use lotteries on money to investigate to what extent the indivisi-bilitynof money is the cause for the typically ine .cient production and consumption decisions in search-theoretic models of money. Our framework potentially generates three types of inefficiencies: the no-trade inefficiency, where no trade takes place even though it would be socially efficient to trade; and the too-much-trade and too-little-trade inefficiencies, where the quantities produced and exchanged are either larger or smaller than what the solution to a social planner’s problem would mandate. It is shown that while the no-trade and the too-much-trade inefficiencies are caused by the indivisibility of money, the too-little-trade inefficiency remains even when money is divisible unless it is sufficiently valued."
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|Item Type:||Working Paper|
|Communities & Collections:||03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
|Deposited On:||29 Nov 2011 21:26|
|Last Modified:||09 Jul 2012 05:02|
|Series Name:||Working paper series / Institute for Empirical Research in Economics|
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