Intensive vs extensive margin tradeoffs in a simple monetary search model

Sébastien Lotz, Andrei Shevchenko and Christopher Waller

Annals of Economics and Statistics, 2007, issue 86, 139-148

Abstract: We introduce ex-post heterogeneity into monetary search models with lotteries. Heterogeneity allows lotteries over goods to exist in equilibrium. These lotteries over goods create an intensive margin (expected production in a match) that is non-existent in all indivisible goods monetary search models. We then show there can be a tradeoff between the intensive margin and extensive margin (number of matches) when choosing the optimal monetary stock.

Date: 2007
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Working Paper: Intensive vs Extensive Margin Tradeoffs in a Simple Monetary Search Model (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2007:i:86:p:139-148

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