Determinacy of equilibrium in a cash-in-advance model

Abstract

This thesis studies on the determinacy of equilibrium in a cash-iii-advance production economy. The model consists o f two types of infinitely lived agents, producer and labor tyjoes. Producer types face financial constraints in their labor demands. There are two markets operating in a sequence, first labor market and then goods market open in each period. In this setup, the possibility o f selffulfilling inflations, deflations and fluctuations are investigated. The first result of the thesis rules out these possibilities. As a second result, we observe that the initial distribution of money across types is irrelevant regarding equilibrium consumption and welfare levels.