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Optimality in a financial economy with outside money and restricted participation

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  • Laura Carosi

Abstract

We analyze an economy with inside financial assets and outside money. Households have differing restricted access on both types of assets and, according to a well-known approach, they use money to pay taxes. Since competitive equilibria are generically inefficient, we perform a Pareto improvability analysis through a monetary intervention. It results that, if the government modifies the amount of money endowments for just one consumer in period one, then Pareto improvements upon the market equilibrium are possible. Copyright Springer-Verlag Italia 2001

Suggested Citation

  • Laura Carosi, 2001. "Optimality in a financial economy with outside money and restricted participation," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 24(1), pages 1-19, May.
    • Handle: RePEc:spr:decfin:v:24:y:2001:i:1:p:1-19
    DOI: 10.1007/s102030170006
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    Cited by:

    1. Gori, Michele & Pireddu, Marina & Villanacci, Antonio, 2013. "Regularity and Pareto improving on financial equilibria with price-dependent borrowing restrictions," Research in Economics, Elsevier, vol. 67(1), pages 100-110.
    2. Carosi, Laura & Gori, Michele & Villanacci, Antonio, 2009. "Endogenous restricted participation in general financial equilibrium," Journal of Mathematical Economics, Elsevier, vol. 45(12), pages 787-806, December.
    3. Elena Mercato & Antonio Villanacci, 2006. "Taxes and money in incomplete financial markets," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 29(1), pages 23-54, May.
    4. Michele Gori & Marina Pireddu & Antonio Villanacci, 2010. "Regularity and Pareto Improving on financial equilibria with endogenous borrowing restrictions," Working Papers - Mathematical Economics 2010-08, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa, revised Aug 2012.

    More about this item

    Keywords

    Mathematics Subject Classification (2000): 90A14; Journal of Economic Literature Classification: D52; E52;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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