Many countries around the world are experiencing a significant shift in demographic patterns towards an older population. The age composition of the labor force has also changed dramatically, often accompanied by sharp reductions in the labor force participation rates of older workers. These...

This paper develops a model in which two information frictions are embedded into an otherwise conventional neoclassical growth model; an adverse selection problem in the labor market and a costly state verification problem in the credit market. The former allows equilibrium unemployment to arise...

Many countries around the world are experiencing a significant shift in demographic patterns towards an older population. The age composition of the labor force has also changed dramatically, often accompanied by sharp reductions in the labor force participation rates of older workers. These...

Momentary equilibria are defined as points that satisfy agents’ optimality conditions and market clearing at any date. However, some dynamic sequences commencing from such points may not be considered valid equilibria because they asymptotically violate some economic restriction of the...

In this paper, we argue that the observed difference in the cost of intraday and overnight liquidity is part of an optimal payments system design. In our environment, the interest charged on overnight liquidity affects output, while the cost of intraday liquidity only affects the distribution of...

This paper studies an overlapping generations economy with capital where limited communication and stochastic relocation create an endogenous transactions role for fiat money. We assume a production function with a knowledge externality (Romer-style) that nests economies with endogenous growth...

We explore the connection between optimal monetary policy and heterogeneity among agents. We utilize a standard monetary economy with two types of agents that differ in the marginal utility they derive from real money balances — a framework that produces a nondegenerate stationary distribution...

The tug-o-war for supremacy between inflation targeting and monetary tar-geting is a classic yet timely topic in monetary economics. In this paper, werevisit this question within the context of a pure-exchange overlapping genera-tions model of money where spatial separation and random relocation...

In an overlapping generations model, momentary equilibria are defined as points that lieon the intergenerational offer curve, i.e., they satisfy agents’ optimality conditions and marketclearing at any date. However, some dynamic sequences commencing from such points may notbe considered valid...

In this paper, we argue that the observed di¤erence in the cost of intraday and overnightliquidity is part of an optimal payments system design. In our environment, the interestcharged on overnight liquidity a¤ects output while the cost of intraday liquidity onlyaffects the distribution of...