general, the model has a monetary steady state in which only a proportion of the agents hold money. Agents who do not hold … money cannot participate in trade in the decentralized market. The proportion of agents holding money is endogenous and …

Many economists have worried about changes in the demand for money, since money demand shocks can affect output … variability and have implications for monetary policy. This paper studies the theoretical implications of changes in money demand … for the nonneutrality of money in the limited participation (liquidity) model and the predetermined (sticky) price model …

This paper analyzes the effects of money injections on interest rates and exchange rates in a model in which agents … must pay a Baumol-Tobin style fixed cost to exchange bonds and money. Asset markets are endogenously segmented because this … fixed cost leads agents to trade bonds and money only infrequently. When the government injects money through an open market …

and some do not. When the fixed cost is zero, the model reduces to the standard one in which persistent money injections …, if markets are sufficiently segmented, then persistent money injections decrease interest rates, steepen or even twist …