Intensive vs Extensive Margin Tradeoffs in a Simple Monetary Search Model
We introduce ex-post heterogeneity into monetary search models with lotteries. Heterogeneity allows lotteries over goods to exist in equilibrium. These lotteries over goods create an intensive margin (expected production in a match) that is non-existent in all indivisible goods monetary search models. We then show there can be a tradeoff between the intensive margin and extensive margin (number of matches) when choosing the optimal monetary stock.
(This abstract was borrowed from another version of this item.)
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