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An overlapping-generations model with search

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  • Zhu, Tao

Abstract

Search is embedded in an overlapping-generations model. The young participate in a centralized market, and then are matched in pairs in a decentralized market. The old only participate in the centralized market. If the buyer's bargaining power in pairwise trade is close to unity and if the old are risk averse, then the golden-rule rate of money transfer is positive. Such risk aversion, the pairwise meetings, and dependence of the young's saving on the rate of return are necessary for this result.

Suggested Citation

  • Zhu, Tao, 2008. "An overlapping-generations model with search," Journal of Economic Theory, Elsevier, vol. 142(1), pages 318-331, September.
  • Handle: RePEc:eee:jetheo:v:142:y:2008:i:1:p:318-331
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    References listed on IDEAS

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    1. S. Boragan Aruoba & Randall Wright, 2003. "Search, money, and capital: a neoclassical dichotomy," Proceedings, Federal Reserve Bank of Cleveland, pages 1085-1117.
    2. Levine, David K., 1991. "Asset trading mechanisms and expansionary policy," Journal of Economic Theory, Elsevier, vol. 54(1), pages 148-164, June.
    3. Abel, Andrew B., 1987. "Optimal monetary growth," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 437-450, May.
    4. Alexei Deviatov, 2006. "Money Creation in a Random Matching Model," Working Papers w0081, Center for Economic and Financial Research (CEFIR).
    5. Zhu, Tao & Wallace, Neil, 2007. "Pairwise trade and coexistence of money and higher-return assets," Journal of Economic Theory, Elsevier, vol. 133(1), pages 524-535, March.
    6. Williamson, Steve & Wright, Randall, 1994. "Barter and Monetary Exchange under Private Information," American Economic Review, American Economic Association, vol. 84(1), pages 104-123, March.
    7. McCallum, Bennett T., 1983. "The role of overlapping-generations models in monetary economics," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 18(1), pages 9-44, January.
    8. Ricardo Lagos & Randall Wright, 2005. "A Unified Framework for Monetary Theory and Policy Analysis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 463-484, June.
    9. Alexei Deviatov, 2004. "Money creation in a random matching model," Money Macro and Finance (MMF) Research Group Conference 2003 24, Money Macro and Finance Research Group.
    10. Deviatov Alexei & Wallace Neil, 2001. "Another Example in which Lump-sum Money Creation is Beneficial," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(1), pages 1-22, February.
    11. S. Boragan Aruoba & Randall Wright, 2002. "Search, Money and Capital: A Neoclassical Dichotomy, Second Version," PIER Working Paper Archive 03-028, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Sep 2003.
    12. Deviatov Alexei, 2006. "Money Creation in a Random Matching Model," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(3), pages 1-20, December.
    13. Maeda, Yasuo, 1991. "Fiat money in a pairwise-trading, multi-good, overlapping generations model," Journal of Economic Theory, Elsevier, vol. 54(1), pages 84-97, June.
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    Cited by:

    1. Guillaume Rocheteau & Pierre-Olivier Weill & Tsz-Nga Wong, 2015. "Working through the Distribution: Money in the Short and Long Run," NBER Working Papers 21779, National Bureau of Economic Research, Inc.
    2. Ohtaki, Eisei, 2014. "Tractable graphical device for analyzing stationary stochastic OLG economies," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 16-26.
    3. Samuel Huber & Jaehong Kim, 2017. "An overlapping generations model for monetary policy analysis," ECON - Working Papers 272, Department of Economics - University of Zurich.
    4. Jacquet, Nicolas L. & Tan, Serene, 2012. "Money and asset prices with uninsurable risks," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 784-797.
    5. Eisei Ohtaki, "undated". "Nominal Idiosyncratic Shocks and Optimal Monetary Policy," Working Papers e57, Tokyo Center for Economic Research.
    6. Altermatt, Lukas, 2018. "Savings, asset scarcity, and monetary policy," Working papers 2018/13, Faculty of Business and Economics - University of Basel.
    7. Kocherlakota, Narayana & Wright, Randall, 2008. "Introduction to monetary and macro economics," Journal of Economic Theory, Elsevier, vol. 142(1), pages 1-4, September.
    8. Deviatov, Alexei & Wallace, Neil, 2009. "A model in which monetary policy is about money," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 283-288, April.
    9. Hasman, Augusto & Samartín, Margarita & van Bommel, Jos, 2014. "Financial intermediation in an overlapping generations model with transaction costs," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 111-125.
    10. University of Notre Dame & Christopher Waller, 2008. "Dynamic Taxation, Private Information and Money," 2008 Meeting Papers 896, Society for Economic Dynamics.
    11. Tsz-Nga Wong & Pierre-Olivier Weill & Guillaume Rocheteau, 2015. "Long-Run and Short-Run Effects of Money Injections," 2015 Meeting Papers 793, Society for Economic Dynamics.

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