This paper studies the relationship between the availability of unsecured credit to households and unemployment. We extend the Mortensen-Pissarides model to include a goods market with search and financial frictions. Households, who have limited commitment, face endogenous borrowing constraints...

We construct a continuous-time model of incomplete markets where households value both deterministic consumption flows and infrequent and random opportunities of lumpy consumption. Because of lack of commitment and lack of record keeping, households cannot borrow to finance these random...

This paper develops an information-based theory of international currency based on search frictions, private trading histories, and imperfect recognizability of assets. Using an open-economy search model with multiple competing currencies, the value of each currency is determined without...

This paper develops an information-based theory of international currency based on search frictions, private trading histories, and imperfect recognizability of assets. Using an open-economy search model with multiple competing currencies, the value of each currency is determined without...

What makes e-money more special than cash? Is the introduction of e-money necessarily welfare enhancing? Is an e-money system necessarily stable? What is the optimal way to design an efficient and stable e-money scheme? This paper provides a first attempt to develop a micro-founded, dynamic,...

This paper introduces a new production externality via factor substitution and explores its effects on generating indeterminacy in one-sector growth models. With the elasticity of substitution depends on the average level of capital intensity, indeterminacy is possible as long as the...

Consider the monetary model of Lagos and Wright (JPE 2005) but with general preferences and general production. I show that preferences satisfying UXXUHH – (UXH)2 = 0 is a sufficient condition for the existence and uniqueness of monetary equilibrium with degenerate money distribution. I solve...

What makes countries productive and rich? This paper endogenizes technology and total factor productivity (TFP) based on a model of technology assimilation. We consider an economy with a large stock of production ideas, where the factor requirements of ideas are different from its factor...

positions that require small reallocations. In such circumstances, welfare can increase if the government steps in, purchases private assets on its own account, and resells them when the economy recovers.