SFB 303 Discussion Paper No. A-416

Author: Gottardi, Piero
Title: On Stationary Monetary Equilibria in Overlapping Generations Models with Incomplete Markets
Abstract: The objective of this paper is to study the stationary monetary equilibria in a stochastic overlapping generations model with a general incomplete asset structure. It is proved that a stationary equilibrium with a non zero price of money generically exists and is locally isolated when there is outside money; for an open set of economies the equilibrium money prices will all be positive. The equilibrium is given a neat characterization in terms of properties of the underlying state prices. With only inside money there will be a continuum of equilibria instead; the same is true with multiple currencies if at least one currency is in zero net supply.
Creation-Date: June 1993
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