This paper investigates the welfare and output effects of inflation in a monetary economy with search frictions and sticky prices. Agents trade in both a centralized Walrasian market and a decentralized search market. Trade has two dimensions: the frequency of trades (how often agents trade) and...

In this paper I examine whether a society can improve welfare by imposing a legal restriction to forbid the use of nominal bonds as a means of payments for goods. To do so, I integrate a microfounded model of money with the framework of limited participation. While the asset market is Walrasian,...

Following Diamond and Dybvig (1983), bank runs in the literature take the form of withdrawals of demand deposits payable in real goods, which deplete a fixed reserve of goods in the banking system. This paper examines modern bank runs, in which withdrawals typically take the form of wire...