Search, Money and Capital: A Neoclassical Dichotomy, Second Version

S. Boragan Aruoba and Randall Wright

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: 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 towards this integration by introducing labor, capital and neoclassical firms. The resulting framework nests the 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 independently of the paths of consumption, investment and employment in the centralized market.

Keywords: Money; Search; Capital (search for similar items in EconPapers)
JEL-codes: D83 E31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2002-09-09, Revised 2003-09-03
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:03-028

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