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A dynamic analysis of nash equilibria in search models with fiat money

Author

Listed:
  • Federico Bonetto

    (School of Mathematics - Georgia Institute of Technology - Georgia Institute of Technology [Atlanta])

  • Maurizio Iacopetta

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, SKEMA Business School)

Abstract

We analyze the rise in the acceptability fiat money in a Kiyotaki–Wright economy by developing a method that can determine dynamic Nash equilibria for a class of search models with genuine heterogeneous agents. We also address open issues regarding the stability properties of pure strategy equilibria and the presence of multiple equilibria, numerical experiments illustrate the liquidity conditions that favor the transition from partial to full acceptance of fiat money, and the effects of inflationary shocks on production, liquidity, and trade.

Suggested Citation

  • Federico Bonetto & Maurizio Iacopetta, 2019. "A dynamic analysis of nash equilibria in search models with fiat money," SciencePo Working papers Main hal-03403584, HAL.
    • Handle: RePEc:hal:spmain:hal-03403584
    DOI: 10.1016/j.jmateco.2019.08.002
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03403584v1
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    References listed on IDEAS

    as
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    Keywords

    Acceptability of money; Perron; Search;
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