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Only Paul Could Go To Changchun

Efficiency of Monetary Exchange with Divisible Fiat Money: An Experimental Approach

11/4/2019

 
Here.

​In this paper, we investigate a search model with divisible fiat money in a laboratory setting where transaction prices are endogenously determined. In the model, there exist welfare-ranked multiple stationary monetary equilibria and gift-giving equilibria. We find that endogenizing transaction prices enhanced the coordination of subjects through monetary exchange and deteriorated it through gift-giving. In other words, the subjects endogenously reduced the trade friction of monetary exchanges. We also compare our experimental results with those in search models with exogenously given transaction prices.


From:


Kazuya Kamiya
Hajime Kobayashi
Tatsuhiro Shichijo
Takashi Shimizu


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