Working Paper

Existence of steady states with positive consumption in the Kiyotaki-Wright model

Abstract: We prove the general existence of steady states with positive consumption in an N goods and fiat money version of the Kiyotaki-Wright (?On money as a median of exchange,? Journal of Political Economy 1989, 97 (4), 927?54) model by admitting mixed strategies. We also show that there always exists a steady state in which everyone accepts a least costly-to-store object. In particular, if fiat money is one such object, then there always exists a monetary steady state. We also establish some other properties of steady states and comment on the relationship between steady states and (incentive) feasible allocations.

Status: Published in Review of Economic Studies (Vol. 58, No. 5, October 1991, pp. 901-916)

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Working Papers

Publication Date: 1991

Number: 428