Liquidity, search, and inequality

The second chapter presents a model with different types of liquidity - money and assets - and capital and focuses on endogenous differences in liquidity balances generated by differing access to asset markets as the portfolio of an agent can only be adjusted when a participation fee is paid. This allows to study the welfare consequences of monetary policy on heterogeneous agents and the consequences of inequality in presence of financial innovation, reducing the need for precautionary liquidity holdings that are costly in an inflationary environment.