Search, money and capital: a neoclassical dichotomy

S. Boragan Aruoba () and Randall Wright ()

No 208, Working Paper from Federal Reserve Bank of Cleveland

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: Monetary theory; Macroeconomics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mon
Date: 2002
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Journal Article: Search, money, and capital: a neoclassical dichotomy (2003)
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