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Output, Prices, and the Velocity of Money in Search Equilibrium

Author

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  • Jafarey, Saqib
  • Masters, Adrian

Abstract

A monetary-search model with match specific preferences and traded quantities is analyzed to assess how aggregate output, the price level, and the velocity of money are affected by various forms of technological change. Changes in the productive technology lead to output and prices moving in opposite directions but provide no prediction for monetary velocity. The matching technology directly affects monetary velocity and output but has little impact on prices. Transactions technologies, which affect the fixed cost of trading, are ambiguous with respect to comovements of output and prices but systematically impact velocity.

Suggested Citation

  • Jafarey, Saqib & Masters, Adrian, 2003. "Output, Prices, and the Velocity of Money in Search Equilibrium," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(6), pages 871-888, December.
    • Handle: RePEc:mcb:jmoncb:v:35:y:2003:i:6:p:871-88
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    Citations

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    Cited by:

    1. Gaumont, Damien & Schindler, Martin & Wright, Randall, 2006. "Alternative theories of wage dispersion," European Economic Review, Elsevier, vol. 50(4), pages 831-848, May.
    2. Peter Rupert & Martin Schindler & Andrei Shevchenko & Randall Wright, 2000. "The search-theoretic approach to monetary economics: a primer," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 10-28.
    3. Dong, Mei & Jiang, Janet Hua, 2014. "Money and price posting under private information," Journal of Economic Theory, Elsevier, vol. 150(C), pages 740-777.
    4. Nejat Anbarci & Richard Dutu & Ching‐Jen Sun, 2019. "On The Timing Of Production Decisions In Monetary Economies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(1), pages 447-472, February.
    5. Guillaume Rocheteau & Randall Wright, 2005. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Econometrica, Econometric Society, vol. 73(1), pages 175-202, January.
    6. Adrian Masters, 2013. "Inflation and Welfare in Retail Markets: Prior Production and Imperfectly Directed Search," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(5), pages 821-844, August.
    7. Adrian Masters, 2010. "Money in a Model of Prior Production and Imperfectly Directed Search," Discussion Papers 10-11, University at Albany, SUNY, Department of Economics.
    8. Janet Hua Jiang & Enchuan Shao, 2020. "The Cash Paradox," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 177-197, April.
    9. Luis Raúl Rodríguez-Reyes, 2018. "A Model of the Indirect Effect of Crime on the Demand for Money," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 13(4), pages 571-584, Octubre-D.
    10. Curtis, Elisabeth & Wright, Randall, 2004. "Price setting, price dispersion, and the value of money: or, the law of two prices," Journal of Monetary Economics, Elsevier, vol. 51(8), pages 1599-1621, November.
    11. International Monetary Fund, 2005. "Alternative Models of Wage Dispersion," IMF Working Papers 2005/064, International Monetary Fund.

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