Faig, Miquel; Li, Zhe - In: Journal of Monetary Economics 56 (2009) 7, pp. 1004-1013
The monetary search model by Lagos and Wright (2005) is extended with imperfect information about nominal shocks as in Lucas (1972). An analytical solution exists with logarithmic preferences. In general, individuals hold precautionary balances. Calibrated to United States postwar data, the...