A NOTE ON MONOTONE COMPARATIVE STATICS FOR MONETARY DIRECTED SEARCH MODELS

Michael Choi

Macroeconomic Dynamics, 2021, vol. 25, issue 6, 1625-1634

Abstract: This note uses monotone methods to derive two sets of comparative statics results for monetary directed search models. First, it characterizes the impact of a higher inflation rate or a higher cost of using credit on market outcomes, regardless of the choice of matching function. Second, the seller-to-buyer ratio, output level, and money demand increase as the matching function becomes more efficient in a log-supermodular sense. I also consider an extension with endogenous search intensity and show that search intensity and trade volume always decrease in the nominal interest rate.

Date: 2021
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