Money, bargaining, and risk sharing

Please use this identifier to cite or link to this item: https://doi.org/10.1111/j.1538-4616.2011.00444.x

Title:	Money, bargaining, and risk sharing
Authors:	Jacquet, N.L. Tan, S.
Keywords:	Bargaining Monetary policy Risk sharing
Issue Date:	Oct-2011
Citation:	Jacquet, N.L., Tan, S. (2011-10). Money, bargaining, and risk sharing. Journal of Money, Credit and Banking 43 (SUPPL. 2) : 419-442. ScholarBank@NUS Repository. https://doi.org/10.1111/j.1538-4616.2011.00444.x
Abstract:	We investigate the dual role of money as a self-insurance device and a means of payment when perfect risk sharing is not possible, and when the two roles of money are disentangled. We use a variant of Lagos-Wright (2005) where agents face a risk in the centralized market (CM): in the decentralized market (DM) money's main role is as a means of payment, while in the CM it is as a self-insurance device. We show that state-contingent inflation rates can improve agents' ability to self-insure in the CM, thereby improving the terms of trade in the DM. We then characterize the optimal monetary policy. © 2011 The Ohio State University.
Source Title:	Journal of Money, Credit and Banking
URI:	http://scholarbank.nus.edu.sg/handle/10635/52128
ISSN:	00222879
DOI:	10.1111/j.1538-4616.2011.00444.x
Appears in Collections:	Staff Publications

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