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A backwardly solvable search equilibrium model

Listed author(s):
  • Toru Hokari


    (Faculty of Economics, Keio University)

  • Shigeru Makioka


    (Graduate School of Economics, Keio University)

  • Masayuki Yao


    (Graduate School of Economics, Keio University)

Registered author(s):

    So-called “search equilibrium models” typically have multiple equilibria. In almost all studies on these models, only steady states are considered mainly because it is difficult to find non-stationary equilibria. This difficulty does not disappear even if we consider finite-horizon versions of these models. In this note, we propose an approach that might be useful to study non-stationary equilibria in these models. In particular, we consider a discrete-time and finite-horizon version of Diamond's (1982, JPE) model and show how to solve it backwardly. As an illustration, we compute a non-stationary equilibrium of a specific example, which exhibits a three-period cycle.

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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 33 (2013)
    Issue (Month): 1 ()
    Pages: 234-246

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    Handle: RePEc:ebl:ecbull:eb-12-00886
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    1. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
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