scholarly journals Aggregate Implications of Micro Asset Market Segmentation

2009 ◽  
Author(s):  
Chris Edmond ◽  
Pierre-Olivier Weill
Keyword(s):  
Market Segmentation ◽  
Asset Market

MONEY TAXES, MARKET SEGMENTATION, AND SUNSPOT EQUILIBRIA

2001 ◽  
Vol 5 (3) ◽  
pp. 327-352
Author(s):  
Todd Keister
Keyword(s):  
Market Segmentation ◽  
Competitive Equilibrium ◽  
Price Level ◽  
Asset Market ◽  
Fiat Money ◽  
Lump Sum ◽  
General Price Level ◽  
Redistribution Policy ◽  
Sunspot Equilibria ◽  
The Government

This paper investigates how volatile the general price level can be in an equilibrium where all uncertainty is extrinsic. The government operates a lump-sum redistribution policy using fiat money. An approach to modeling asset market segmentation is introduced in which this tax policy determines how volatile the price level can be, which in turn determines the volatility of consumption. The paper characterizes (i) the set of general price levels consistent with the existence of competitive equilibrium and (ii) the resulting set of equilibrium allocations. The results demonstrate how redistribution policies that are fixed in nominal terms can have a destabilizing effect on an economy, and show how to evaluate the amount of volatility that a particular policy may induce.

scholarly journals Aggregate implications of micro asset market segmentation

2012 ◽  
Vol 59 (4) ◽  
pp. 319-335 ◽  
Author(s):  
Chris Edmond ◽  
Pierre-Olivier Weill
Keyword(s):  
Market Segmentation ◽  
Asset Market

MONEY, CREDIT, AND LIMITED PARTICIPATION

2011 ◽  
Vol 15 (5) ◽  
pp. 616-655 ◽  
Author(s):  
Hyung Sun Choi
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Market Segmentation ◽  
Indirect Effect ◽  
Asset Market ◽  
Money Growth ◽  
Limited Participation ◽  
Distributional Effects ◽  
Friedman Rule ◽  
The Government

An asset market segmentation model is constructed to study the distributional effects of monetary policy when economic individuals can choose means of payment among alternatives. In equilibrium, monetary policy has two distributional effects: a direct effect and an indirect effect through the choice of means of payment. When the government injects money, some purchase a greater variety of goods with cash whereas others purchase a greater variety of goods with credit. Credit can dampen fluctuations in consumption arising from monetary policy. The optimal money growth rate can be positive or negative. The Friedman rule is not optimal in general.

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