 Liquidity, Bargaining, and Multiple Equilibria in a Search Monetary ModelAnnals of Economics and Finance, 2001, vol. 2, issue 2, 325-351 Abstract: In this paper I construct a search monetary model with capital accumulation where money and goods are both divisible. Agents in matches determine the terms of trade through a sequential bargaining process and they face trading restrictions that require the quantity of money traded not to exceed what the buyer brings into the match. I show that sellers¡¯ share of the match surplus decreases with the severity of the trading restrictions. Such endogenous surplus shares generate multiple, self-fulfilling monetary steady states. When liquidity is interpreted as the number of transactions, the steady state with higher aggregate activities has higher liquidity. In both steady states, an increase in the money growth rate increases aggregate output and consumption by increasing the number of matches. Keywords: Money Search; Capital; Liquidity; Multiplicity; Bargaining (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2001:v:2:i:2:p:325-351 Access Statistics for this article Annals of Economics and Finance is currently edited by Heng-fu Zou More articles in Annals of Economics and Finance from Society for AEF Contact information at EDIRC. |
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