Technical Report An Axiomatic Characterization of the Price-Money Message Mechanism

Urai, Ken  ,  Murakami, Hiromi

15-31-Rev.pp.1 - 10 , 2016-03 , Graduate School of Economics and Osaka School of International Public Policy (OSIPP) Osaka University
* Revised: [15-31, 2015]
The axiomatic characterization of price or market equilibrium is one of the most important problems in the general equilibrium theory. There does not seem to exist, however, so many papers on the axiomatic characterization problem of monetary equilibrium. The overlapping-generations model with a double infinity of commodities and agents is one of the most fundamental frameworks for introducing money into an economic model, although a simple game-theoretic or welfare characterization on the role of money under competitive mechanism is widely known to be difficult. In this paper, we show that the informational efficiency axiomatic characterization as in Hurwicz (1960), Mount and Reiter (1974) and Sonnenschein (1974) is possible for the price-money competitive mechanism for overlapping-generations economies among the class of all allocation mechanisms with messages. Especially, the category theoretic universal mapping characterization in Sonnenschein (1974) is generalized and applied to the overlapping-generations framework through our monetary version of Debreu-Scarf's core limit theorem of Urai and Murakami (2015). Our argument is also closely related to the replica characterization approaches of Walrasian social choice mechanism like Thomson (1988) and Nagahisa (1994), and provide a comprehensive perspective on them.

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