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- Title
Unstable and stable steady-states in the Kiyotaki-Wright model.
- Authors
Renero, Juan-Manuel
- Abstract
Summary. I provide new results concerning dynamics for a version of the Kiyotaki-Wright model (1989) in which strategies (either mixed or pure) are restricted so that agents play the same strategy for each opportunity set. My results demonstrate the importance of examining stability in such models, because they show that many steady states focused on in the literature are not stable. Furthermore, I exhibit examples of two-period-convergent equilibria in which agents are indifferent among media of exchange. Consequently, their endogenous transaction pattern is analog to the coexistence of assets whose acceptability or "liquidity" varies inversely with their rates of return.
- Subjects
ECONOMIC equilibrium; LIQUIDITY (Economics)
- Publication
Economic Theory, 1998, Vol 11, Issue 2, p275
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s001990050188