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Unstable and stable steady-states in the Kiyotaki-Wright model

Author

Listed:
  • Juan-Manuel Renero

    (Departamento de EconomÎa, Instituto TecnolÕgico AutÕnmo de MÊxico , Rio Hondo No. 1, MÊxico, D.F. 0100, MEXICO)

Abstract

I provide new results concerning dynamics for a version of the Kiyotaki-Wright model (1989) in which strategies (either mixed or pure) are restricted so that agents play the same strategy for each opportunity set. My results demonstrate the importance of examining stability in such models, because they show that many steady states focused on in the literature are not stable. Furthermore, I exhibit examples of two-period-convergent equilibria in which agents are indifferent among media of exchange. Consequently, their endogenous transaction pattern is analog to the coexistence of assets whose acceptability or "liquidity" varies inversely with their rates of return.

Suggested Citation

  • Juan-Manuel Renero, 1998. "Unstable and stable steady-states in the Kiyotaki-Wright model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(2), pages 275-294.
    • Handle: RePEc:spr:joecth:v:11:y:1998:i:2:p:275-294
    Note: Received: June 21, 1996; revised version: December 2, 1996
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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/4kidd5kmrd8huad84htlv8ih5r is not listed on IDEAS
    2. Bonetto, Federico & Iacopetta, Maurizio, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Journal of Mathematical Economics, Elsevier, vol. 84(C), pages 207-224.
    3. Maurizio Iacopetta, 2019. "The emergence of money: a dynamic analysis," SciencePo Working papers Main hal-03403573, HAL.
    4. Kiyotaki, Nobuhiro & Lagos, Ricardo & Wright, Randall, 2016. "Introduction to the symposium issue on money and liquidity," Journal of Economic Theory, Elsevier, vol. 164(C), pages 1-9.
    5. Zakaria Babutsidze & Maurizio Iacopetta, 2021. "The Emergence of Money: Computational Approaches with Fully and Boundedly Rational Agents," Computational Economics, Springer;Society for Computational Economics, vol. 58(1), pages 3-26, June.
    6. Maurizio Iacopetta, 2014. "dynamics of assets liquidity and inequality in economies with decentralized markets," Working Papers hal-01099374, HAL.
    7. Juan-Manuel Renero, 2000. "May the Worst Commodity Standard be the Best? A Re-enactment of "The Crimes of 1873"," Econometric Society World Congress 2000 Contributed Papers 1522, Econometric Society.
    8. repec:spo:wpmain:info:hdl:2441/48v4b2d60n9bipfp9hcmbgtucs is not listed on IDEAS
    9. Maurizio Iacopetta & Raoul Minetti, 2019. "Asset Dynamics, Liquidity, And Inequality In Decentralized Markets," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 537-551, January.
    10. Maurizio Iacopetta, 2019. "The emergence of money: a dynamic analysis," Post-Print hal-03403573, HAL.
    11. Davis, Douglas & Korenok, Oleg & Norman, Peter & Sultanum, Bruno & Wright, Randall, 2022. "Playing with money," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1221-1239.
    12. repec:hal:spmain:info:hdl:2441/2029nqlehl81soi17i2hktujh9 is not listed on IDEAS
    13. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," Post-Print hal-03403584, HAL.
    14. Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," SciencePo Working papers Main hal-03403584, HAL.
    15. repec:hal:spmain:info:hdl:2441/2bedunljk79gt86fbf15pvnnc5 is not listed on IDEAS
    16. repec:hal:spmain:info:hdl:2441/48v4b2d60n9bipfp9hcmbgtucs is not listed on IDEAS
    17. Maurizio Iacopetta, 2014. "dynamics of assets liquidity and inequality in economies with decentralized markets," SciencePo Working papers Main hal-01099374, HAL.
    18. Federico Bonetto & Maurizio Iacopetta, 2019. "A Dynamic Analysis of Nash Equilibria in Search Models with Fiat Money ," Post-Print halshs-03515530, HAL.
    19. repec:spo:wpmain:info:hdl:2441/2bedunljk79gt86fbf15pvnnc5 is not listed on IDEAS
    20. repec:spo:wpmain:info:hdl:2441/2029nqlehl81soi17i2hktujh9 is not listed on IDEAS
    21. repec:spo:wpmain:info:hdl:2441/4kidd5kmrd8huad84htlv8ih5r is not listed on IDEAS

    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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