The fact that money, banking, and financial markets interact in important ways seems self-evident. The theoretical … for government money, where the terms of bank deposit contracts are constrained by the liquidity insurance available in …

This paper studies the validity of the Friedman rule in a search model with divisible money and divisible goods in … the one emphasized in the labor-market literature. Buyers cannot obtain the full return that an additional unit of money … provides to the match, which makes the purchasing power of money inefficiently low in equilibrium. Consequently, even though …

: double-coincidence frictions and information frictions. For both types of frictions, money enlarges the sets of incentive …-feasible if the real stock of money is sufficiently high. In contrast, in environements with information frictions, the first …-best allocation is never incentivefeasible regardless of the real stock of money. These results highlight a fundamental difference …

We construct a tractable model of divisible money and equilibrium heterogeneity in money balances and prices. We do so … by considering randomized monetary trades in a standard search-theoretic model of money where agents can hold multiple … observed in numerically simulated economies with fully divisible money and price heterogeneity. …

This paper studies the role of money in environments where in each meeting there is a double coincidence of real wants …. Traders who meet at random finance their purchases through current production, the sale of divisible money or both. It is … shown that in the absence of valued money if traders have asymmetric tastes for each other’s good, they produce and exchange …

Many search models of money rely on the double coincidence of real wants problem to generate a role for money and, for … the sake of tractability, assume money to be indivisible. In this article, we study the implications of these two … assumptions for the formation of the terms of trades and the purchasing power of money. In the First part of the paper we show …