We introduce household production and the production of houses (construction) into a monetary model. Theory predicts inflation, as a tax on market activity, encourages substitution into household production and hence investment in housing. In the model, the stock and appropriately-deflated price...

We study models incorporating money, household production, and investment in housing. Inflation, as a tax on market activity, encourages substitution into household production, and thus investment in household capital. Hence, inflation increases the (appropriately deflated) value of the housing...

In a simple search model of money, we study a special kind of memory which gives rise to an arrangement resembling a payment network. Specifically, we assume that agents can choose to have access to a central data base which keeps track of payments made and received. We show that multiple...

A segmented markets model is constructed in which transactions are conducted using credit and currency. Goods market segmentation plays an important role, in addition to the role played by conventional segmentation of asset markets. An important novelty of the paper is to show how the diffusion...

We study general equilibrium with nonconvexities. In these economies there exist sunspot equilibria without the usual assumptions needed in convex economies, and they have good welfare properties. Moreover, in these equilibria, agents act as if they have quasi-linear utility. Hence wealth...

In this preliminary version we consider different types of ex-ante heterogeneity (production cost, preferences, market access, etc.) in a Lagos-Wright (2003) framework. Such heterogeneity generates equilibrium inequality in nominal wealth, or money holdings. We have two basic objectives. First,...

This paper analyzes monetary exchange in a search model allowing for multilateral matches to be formed, according to a standard urn-ball process. We consider three physical environments: indivisible goods and money, divisible goods and indivisible money, and divisible goods and money. We compare...