A Divisible Search Model of Fiat Money
AbstractThis paper extends the Kiyotaki-Wright search model of fiat money to allow for divisible money and goods. The extension allows me to examine the standard issues in monetary economics, such as the neutrality and super-neutrality of money, by severing the artificial link in the Kiyotaki-Wright model between the money supply and the number of money holders. It is shown that money is neutral, but not super-neutral. Money growth generates a trading opportunity effect: it changes the fraction of different agents in the economy and hence changes the probability with which agents have a successful match. In addition, money growth has a negative effect on the real money balance that is familiar in Walrasian monetary models. The balance of the two effects can imply a positive optimal money growth rate.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 930.
Length: 36 pages
Date of creation: Feb 1996
Date of revision:
search; fiat money; neutrality; super-neutrality; trading opportunity; coincidence of wants;
Other versions of this item:
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
You can help add them by filling out this form.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Search Frictions and Asset Price Volatility
by Christian Zimmermann in NEP-DGE blog on 2010-01-18 05:02:28
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading lists or Wikipedia pages:
- Quantitative Macroeconomics and Real Business Cycles (QM&RBC)
- Top 1 items by number of citations weighted by recursive impact factors and discounted by age
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.