Search, Money and Capital: A Neoclassical Dichotomy

(with Randall D. Wright)

Published in Journal of Money Credit and Banking, December 2003, 35(6), 1085-1105.

Recent work has reduced the gap between search-based monetary theory and mainstream macroeconomics by incorporating into the search model some centralized markets as well as some decentralized markets where money is essential. This paper takes a further step toward this integration by introducing labor, capital, and neoclassical firms. The resulting framework nests a search-theoretic monetary model and a standard neoclassical growth model as special cases. Perhaps surprisingly, it also exhibits a dichotomy: one can determine the equilibrium path for the value of money independent of the paths of consumption, investment, and employment in the centralized market.

Most Recent Working Paper  (may not be identical to the published version)

Published Version (requires subscription)

Discussion by Christopher J. Waller (requires subscription)

Discussion by Peter Howitt (requires subscription)

Leave a Reply