This paper contributes to the search theory of unemployment by endogenously deriving matching functions and surplus sharing rule for skilled and unskilled workers from a wage-posting game. In contrast to previous wage posting models, here both sides of the market are heterogeneous and the...

We explain why underpricing in IPOs can be large in magnitude and clustered, using a signalling model where firms have private information about their qualities (high or low). A novel feature is that a firm, if perceived by the market as high quality, benefits from the industry's publicity which...

This paper extends the Kiyotaki-Wright search model of fiat money to allow for divisible money and goods. The extension allows me to examine the standard issues in monetary economics, such as the neutrality and super-neutrality of money, by severing the artificial link in the Kiyotaki-Wright...

This paper looks at the joint determination of international indebtedness and capital accumulation in a two-country model. National rates of time preference are endogenous, and adjust along an optimal path to come into equality with one another in the steady state. A country's level of...

In this paper we construct a two-country search monetary model to determine the nominal exchange rate between two fiat monies. Our model imposes natural restrictions on agents' opportunities for arbitrage. These restrictions bind when the gross growth rates of the two currency stocks exceed the...

This paper constructs a model to show that plants differing in size pay different wages to homogeneous workers. A large plant can use its large capacity to satisify buyers in the product market more readily and so can charge a higher price than a small plant can. As a result, a large plant has a...

This paper examines efficient and equilibrium allocations in an economy where agents with diverse characteristics are matched through a time-consuming process to produce output. This is cast in a labour market where workers of different skills match with machines of different qualities. The...

This paper constructs a model to integrate the search monetary theory into a neoclassical growth model. With divisible goods and money, the model is used to examine the relationship between money growth and capital accumulation. The framework uncovers a distinct extensive effect that an increase...

This paper examines the competition between money and credit in a search model with divisible commodities. It is shown that flat money can be valuable even though it yields a lower rate of return than the coexisting credit. The competition between money and credit increases efficiency. The...

This paper integrates labor market search into an intertemporal equilibrium model to analyze the dynamic macroeconomic effects of a tariff. The model captures the intuitive argument in the earlier literature that a permanent increase in the tariff improves the country's terms of trade, which...