This paper addresses why it is beneficial for a society to restrict the use of nominal bonds as a means of payment for goods. The model has a centralized asset market and a decentralized goods market. Individuals face matching shocks that affect the marginal utility of consumption, but they...

This paper advances a model which can account for these five prominent facts of monetary economics. (i) Money is held in non trivial amounts even though it is a dominated asset. (ii) High rates of inflation lead to low rates of growth. (iii) Monetary injections momentarily depress the rate of...

This paper advances a highly tractable model with search theoretic foundations for money and neoclassical growth. In the model, manufacturing and commerce are distinct and separate activities. In manufacturing, goods are efficiently produced combining capital and labor. In commerce, goods are...

This paper provides a tractable search model with divisible money that encompasses the two frameworks currently used in the literature. Individuals belong to many villages. Inside a village, individuals know each other so financial contracts are feasible. Money is essential to facilitate trade...

We construct a dynamic equilibrium model where there is costly search in the goods market and the labor market. Incorporating shocks to money growth and productivity, we calibrate the model to the US time series data to examine the model's quantitative predictions on aggregate variables and, in...

This paper extends the income fluctuations problem to an economy with endogenous growth. In the present setup, individuals, instead of owning an stream of endowments, accumulate capital with an investment irreversibility constraint and face uninsurable idiosyncratic risks to the return to...

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,...

Entrepreneurship, by its very essence, concerns the theory of the firm --- the individual enterprise --- which in turn is the essential core of micro-economics. A major theme of this study, however, is to demonstrate the interaction of micro- and macro-economic phenomena: to show how such firms...

Central banks have consistently differentiated the return on the securities they have issued (money and national debt). In contrast, first best efficiency demands that these securities earn the same return: the return on capital. A self-financed central bank, without capital and taxes, cannot...

This is a comment on the work of Rocheteau and Wright (2005) who have recently introduced competitive search into monetary economics. We extend their work by eliminating the restriction that the fees market makers charge to enter a submarket must be either non-negative or identical for buyers...