STATIONARY MONETARY EQUILIBRIA IN OVERLAPPING GENERATIONS MODELS WITHINCOMPLETE MARKETS

The objective of this paper is to study the stationary monetary equili bria of a stochastic overlapping generations model with a general inco mplete asset structure. it is proved that a stationary equilibrium wit h a nonzero price of money generically exists and is locally isolated when there is outside money, for an open set of economies there is an equilibrium with positive money prices in all states. The equilibrium is also given a neat characterisation in terms of the properties of th e underlying state prices. With only inside money there will instead b e a continuum of equilibria. (C) 1996 Academic Press, Inc.