IDEAS home Printed from https://ideas.repec.org/a/kap/jeczfn/v110y2013i3p241-256.html
   My bibliography  Save this article

Monetary policy with linear information costs

Author

Listed:
  • Dimitris Voliotis

Abstract

The paper adresses the problem of a monetary economy with costs of information, imposed in linear form. In particular, we make use of a strategic market game with money where equilibria are standardly non-Walrasian, permitting an active role to monetary policy. The imposition of information costs alters the demand of real balances since traders demand extra money for gathering and processing the necessary information. As a result, money injections could be proved welfare improving only when the induced information costs do not offset the resulted gains to trade. Copyright Springer-Verlag 2013

Suggested Citation

  • Dimitris Voliotis, 2013. "Monetary policy with linear information costs," Journal of Economics, Springer, vol. 110(3), pages 241-256, November.
    • Handle: RePEc:kap:jeczfn:v:110:y:2013:i:3:p:241-256
    DOI: 10.1007/s00712-012-0299-z
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00712-012-0299-z
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00712-012-0299-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kurz, Mordecai, 1994. "On the Structure and Diversity of Rational Beliefs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(6), pages 877-900, October.
    2. M. Shubik & D. Tsomocos, 1992. "A strategic market game with a mutual bank with fractional reserves and redemption in gold," Journal of Economics, Springer, vol. 55(2), pages 123-150, June.
    3. Pradeep Dubey & John Geanakoplos, 2000. "Inside and Outside Money, Gains to Trade, and IS-LM," Cowles Foundation Discussion Papers 1257, Cowles Foundation for Research in Economics, Yale University.
    4. Dubey, Pradeep & Shapley, Lloyd S., 1994. "Noncooperative general exchange with a continuum of traders: Two models," Journal of Mathematical Economics, Elsevier, vol. 23(3), pages 253-293, May.
    5. Nti, Kofi O. & Shubik, Martin, 1984. "Noncooperative exchange using money and broker-dealers," Mathematical Social Sciences, Elsevier, vol. 7(1), pages 59-82, February.
    6. de la Fuente, Angel & Naranjo, Maria Teresa, 1999. "Continuity of the constraint correspondence in parameterized Kuhn-Tucker problems with concave constraints," Economics Letters, Elsevier, vol. 62(3), pages 301-305, March.
    7. Rogawski, J. & Shubik, M., 1986. "A strategic market game with transactions costs," Mathematical Social Sciences, Elsevier, vol. 11(2), pages 139-160, April.
    8. Dubey, Pradeep & Shubik, Martin, 1978. "A theory of money and financial institutions. 28. The non-cooperative equilibria of a closed trading economy with market supply and bidding strategies," Journal of Economic Theory, Elsevier, vol. 17(1), pages 1-20, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Toraubally, Waseem A., 2018. "Large market games, the law of one price, and market structure," Journal of Mathematical Economics, Elsevier, vol. 78(C), pages 13-26.
    2. Régis Breton & Bertrand Gobillard, 2005. "Robustness of equilibrium price dispersion in finite market games," Post-Print halshs-00257207, HAL.
    3. Ray, Indrajit, 2001. "Buying and selling in strategic market games," Economics Letters, Elsevier, vol. 71(1), pages 49-53, April.
    4. Leonidas Koutsougeras, 2007. "From strategic to price taking behavior," Economics Discussion Paper Series 0717, Economics, The University of Manchester.
    5. Peck, James, 2003. "Large market games with demand uncertainty," Journal of Economic Theory, Elsevier, vol. 109(2), pages 283-299, April.
    6. Gaël Giraud & Dimitrios Tsomocos, 2010. "Nominal uniqueness and money non-neutrality in the limit-price exchange process," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 45(1), pages 303-348, October.
    7. Shubik, Martin, 1990. "A game theoretic approach to the theory of money and financial institutions," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 5, pages 171-219, Elsevier.
    8. Dimitris Voliotis, 2013. "Arbitrage, strategic inefficiency and self-regulation," Review of Economic Design, Springer;Society for Economic Design, vol. 17(1), pages 27-41, March.
    9. Kannai, Yakar & Rosenmüller, Joachim, 2010. "Strategic behavior in financial markets," Journal of Mathematical Economics, Elsevier, vol. 46(2), pages 148-162, March.
    10. Dmitry Levando, 2012. "A Survey Of Strategic Market Games," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 63-106, July - Se.
    11. van Raalte, C.L.J.P., 1996. "Market formation and market selection," Other publications TiSEM 5b11cea5-dfe7-4a8c-adb9-f, Tilburg University, School of Economics and Management.
    12. Winkler, Bernhard, 2000. "Which kind of transparency? On the need for clarity in monetary policy-making," Working Paper Series 0026, European Central Bank.
    13. Lionel de Boisdeffre, 2018. "Sequential equilibrium without rational expectations of prices: A theorem of full existence," Post-Print halshs-01593567, HAL.
    14. Dimitrios Tsomocos, 2003. "Equilibrium analysis, banking, contagion and financial fragility," FMG Discussion Papers dp450, Financial Markets Group.
    15. Al-Najjar, Nabil I., 2008. "Large games and the law of large numbers," Games and Economic Behavior, Elsevier, vol. 64(1), pages 1-34, September.
    16. Paul De Grauwe & Marianna Grimaldi, 2004. "Bubbles and Crashes in a Behavioural Finance Model," CESifo Working Paper Series 1194, CESifo.
    17. Eva Catarineu-Rabell & Patricia Jackson & Dimitrios Tsomocos, 2005. "Procyclicality and the new Basel Accord - banks’ choice of loan rating system," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(3), pages 537-557, October.
    18. Sudipto Bhattacharya & Pojanart Sunirand, 2012. "Banks, Relative Performance, and Sequential Contagion," Chapters, in: The Challenge of Financial Stability, chapter 7, pages 153-170, Edward Elgar Publishing.
    19. Goodhart, C.A.E. & Sunirand, P. & Tsomocos, D.P., 2011. "The optimal monetary instrument for prudential purposes," Journal of Financial Stability, Elsevier, vol. 7(2), pages 70-77, June.
    20. Kurz, Mordecai, 2008. "Beauty contests under private information and diverse beliefs: How different?," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 762-784, July.

    More about this item

    Keywords

    Central Bank; Transaction costs; Gains to trade; D50; E48; E50; E58;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:110:y:2013:i:3:p:241-256. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.