Bargaining with revoking costs

Aggregate unemployment and household unsecured debt

“…These results cannot be guaranteed with Nash bargaining (Aruoba et al, 2007). Dutta (2012) provides strategic foundations for the proportional bargaining solution.…”

Liquidity: A New Monetarist Perspective

“…Kalai bargaining is very tractable and satisfies the axioms of individual rationality and Pareto efficiency, which are obviously natural in this context. It also has a strategic foundation(Dutta 2012), although that is not as simple as strategic foundations for Nash bargaining.…”

A Framework for Analyzing Monetary Policy in an Economy with E-Money

“…t=1 that solves (10) and (11) constitutes an equilibrium if it satis…es the transversality conditions lim t!1 t z m t = 0 and lim t!1 t z h t = 0. The liquidity premium is essentially the Lagrangian multiplier on the constraint that households cannot spend more than they have.…”

“…where z h depends on both i m and i h through (12)-(13). 11 If i h + 1 1 > 0, the e-money authority is selling e-money in the CM and earns a pro…t. 12 The e-money issuer maximizes i m ; i h by setting i h taking i m as given while the central bank sets i m to maximize i m ; i h taking i h as given.…”

“…The former considers a game where two central banks compete to set policies to maximize welfare of their own citizens. The latter considers an optimal asset issuance problem with two competing asset issuers 11. An alternative formulation is that at the …rst stage, the e-money issuer initially issues e-money and then chooses i h to maximize its total revenue, which includes both the revenue from initial issuance and the total seigniorage income, i.e.,h i m ; i h = z h + 1 i h + 1 1 z h = i h + 1 .The results are similar qualitatively 12.…”