Divisible money with partially directed search
Monetary search models are difficult to analyze unless the distribution of money holdings is made degenerate. Popular techniques include using an infinitely large household (Shi 1997) and adding a centralized market with quasi-linear utility (Lagos and Wright 2005). Wallace (2002) suggests as an alternative to have two-member households who can somehow direct their search, thus creating a degenerate distribution in a different way. This idea is modelled here for the first time by modifying the partially directed search model of Goldberg (forthcoming). The Friedman rule is optimal, but the costs of deviating from it are different from the above mentioned models
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- Shouyong Shi, 1997.
"A Divisible Search Model of Fiat Money,"
Econometric Society, vol. 65(1), pages 75-102, January.
- Shouyong Shi, 1995.
"Money and Prices: A Model of Search and Bargaining,"
916, Queen's University, Department of Economics.
- Shi Shougong, 1995. "Money and Prices: A Model of Search and Bargaining," Journal of Economic Theory, Elsevier, vol. 67(2), pages 467-496, December.
- Berentsen Aleksander & Rocheteau Guillaume, 2003.
"On the Friedman Rule in Search Models with Divisible Money,"
The B.E. Journal of Macroeconomics,
De Gruyter, vol. 3(1), pages 1-21, December.
- Aleksander Berentsen & Guillaume Rocheteau, . "On the Friedman Rule in Search Models with Divisible Money," IEW - Working Papers 155, Institute for Empirical Research in Economics - University of Zurich.
- Goldberg, Dror, 2007. "Money with partially directed search," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 979-993, May.
- Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-41, February.
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