Search, Money and Capital: A Neoclassical Dichotomy, Second Version
33 Pages Posted: 25 Nov 2003
Date Written: September 3, 2003
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.
Note: A previous version of this paper can be found at: http://ssrn.com/abstract=337160
JEL Classification: D83, E31
Suggested Citation: Suggested Citation
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