Determinancy of monetary equilibria in an economy with no real risk (Q4936394)

Recent investigations of equilibria in economies with incomplete markets and nominal assets show that the set of equilibrium allocations of these economies is indeterminate. This set contains a high-dimensional submanifold of equilibria. This paper considers the problem in economies with no real risk. The only source of uncertainty comes from fluctuations in the money supply. Money plays the role of medium of exchange and affects the real allocation. It is shown that the monetary economy can be transformed into a standard Arrow-Debreu economy and these two economies have the same equilibrium allocations. It is proved that the set of monetary equilibria is locally unique for every level of money supply. For the entire collection see [Zbl 0909.00060].