A comment on: "Efficient propagation of shocks and the optimal return on money"

Pidong Huang, Yoske Igarashi

Research output: Contribution to journalComment/debatepeer-review

Abstract

Lotteries are introduced into Cavalcanti and Erosa (2008) [2], a version of Trejos and Wright (1995) [4] with aggregate shocks. Lotteries improve welfare and eliminate the two notable features of the optimum with deterministic trades: over-production and history-dependence. Moreover, the optimum can be supported by buyer take-it-or-leave-it offers.

Original languageEnglish
Pages (from-to)382-388
Number of pages7
JournalJournal of Economic Theory
Volume147
Issue number1
DOIs
Publication statusPublished - 2012 Jan
Externally publishedYes

Keywords

  • Aggregate shock
  • History-dependence
  • Lottery
  • Optimal allocation
  • Random matching model of money

ASJC Scopus subject areas

  • Economics and Econometrics

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