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Contagion Equilibria in a Monetary Model
Author(s) -
Aliprantis Charalambos D,
Camera Gabriele,
Puzzello Daniela
Publication year - 2007
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/j.1468-0262.2007.00739.x
Subject(s) - library science , citation , dept , operations research , political science , computer science , engineering , medicine , immunology
The model of Lagos and Wright [9] alters the meeting friction of the typical search model of money to obtain degeneracy in equilibrium holdings and enhance analytical tractability. It introduces a round of Walrasian ‘centralized’ trading after each round of bilateral random ‘decentralized’ trading. The basic premise is that, although the population meets repeatedly in the centralized market, anonymity and random pairings are frictions sufficient for money to be essential (see [9, p. 466] or [11, p. 175]; for the essentiality see [6, 8]).