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Asset Dynamics, Liquidity, and Inequality in Decentralized Markets

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  • Maurizio Iacopetta

    (SKEMA Business School - SKEMA Business School)

  • Raoul Minetti

    (Michigan State University [East Lansing] - Michigan State University System)

Abstract

Kiyotaki and Wright (1989) model has exerted considerable in ‡uence in the monetary search literature. We argue that the model delivers also important insights on a broader range of macroeconomic and development issues. The analysis studies how market frictions and the liquidity of assets a¤ect the distribution of income. Experiments illustrate how the economy adjusts to shocks to assets' returns and to the matching technology. They also deal with long-run transition. An experiment interprets the reversal of fortune hypothesis as a situation in which an economy with a low-return asset takes over a similar economy with a high-return asset.

Suggested Citation

  • Maurizio Iacopetta & Raoul Minetti, 2019. "Asset Dynamics, Liquidity, and Inequality in Decentralized Markets," Post-Print halshs-03515555, HAL.
    • Handle: RePEc:hal:journl:halshs-03515555
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03515555
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    References listed on IDEAS

    as
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    Cited by:

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    2. Iacopetta, Maurizio, 2021. "Class differences and the Commercial Revolution: An equilibrium selection story," Economic Modelling, Elsevier, vol. 100(C).

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    More about this item

    Keywords

    Trading Strategies; Liquidity; Matching; Decentralized Markets;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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