Endogenous buyer-seller choice and divisible money in search equilibrium

A-Tier
Journal: Journal of Economic Theory
Year: 2008
Volume: 141
Issue: 1
Pages: 184-199

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In the Lagos-Wright model [R. Lagos, R. Wright, A unified framework for monetary theory and policy analysis, J. Polit. Economy 113 (2005) 463-484], the quasi-linear preferences assumption is not necessary to generate simple distributions of money holdings if individuals choose endogenously to go to the search market as buyers or as sellers. The non-convex buyer-seller choice provides an incentive for gambling in lotteries, and, as a result, the value function has a linear interval. As long as this interval is the relevant one for evaluating their future utilities, individuals behave as if their preferences were quasi-linear. In the stationary equilibrium, individuals remain inside this linear interval if the money supply does not decline.

Technical Details

RePEc Handle
repec:eee:jetheo:v:141:y:2008:i:1:p:184-199
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25