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

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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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    Cited by:

    1. Dong, Mei & Jiang, Janet Hua, 2014. "Money and price posting under private information," Journal of Economic Theory, Elsevier, vol. 150(C), pages 740-777.
    2. 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.
    3. International Monetary Fund, 2005. "Alternative Models of Wage Dispersion," IMF Working Papers 05/64, International Monetary Fund.
    4. 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.
    5. Gaumont, Damien & Schindler, Martin & Wright, Randall, 2006. "Alternative theories of wage dispersion," European Economic Review, Elsevier, vol. 50(4), pages 831-848, May.
    6. 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, pages 1599-1621.
    7. 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.
    8. Anbarci, Nejat & Dutu, Richard & Sun, Ching-jen, 2016. "On the Timing of Production Decisions in Monetary Economies," MPRA Paper 72876, University Library of Munich, Germany.

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