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On the efficiency of monetary exchange: how divisibility of money matters

Berentsen, Aleksander; Rocheteau, Guillaume

Description

We use alternative assumptions about the divisibility of goods and money and the ability of agents to use lotteries on money to investigate to what extent the indivisibility of money is the cause for the typically inefficient production and consumption decisions in search-theoretic models of money. Our framework potentially generates three types of inefficiencies: the no-trade inefficiency, where no trade takes place even though it would be socially efficient to trade; and the too-much-trade...[Show more]

CollectionsANU Research Publications
Date published: 2002
Type: Journal article
URI: http://hdl.handle.net/1885/88171
Source: Journal of Monetary Economics
DOI: 10.1016/S0304-3932(02)00178-2

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