Individual and aggregate real balances in a random-matching model

This article investigates the characteristics of stationary single-price eq uilibrium in a monetary random-matching model where agents can hold an arbi trary amount of divisible money and where production is costly. At such an equilibrium, agents' money holdings are endogenously determined and uniform ly bounded. A refinement of weakly undominated strategies is argued to be n ecessary. It is shown that a continuum of single-price equilibria indexed b y the aggregate real-money balance exists if one such equilibrium exists. E quilibria with different money-holdings upper bounds, hence different distr ibutions, but with identical aggregate real-money balances can coexist.