Paper #567

Títol:

A search theory of money and commerce with Neoclassical production

Autor:

Miquel Faig

Data:

Setembre 2001

Resum:

This paper advances a highly tractable model with search theoretic foundations for money and neoclassical growth. In the model, manufacturing and commerce are distinct and separate activities. In manufacturing, goods are efficiently produced combining capital and labor. In commerce, goods are exchanged in bilateral meetings. The model is applied to study the effects of inßation on capital accumulation and welfare. With realistic parameters, inflation has large negative effects on welfare even though it raises capital and output. In contrast, with cash-in-advance, a device informally motivated with bilateral trading, inflation depresses capital and output and has a negligible effect on welfare.

Paraules clau:

Search, money, commerce, inflation, neoclassical production, capital accumulation, optimum quantity of money

Codis JEL:

E40, E52, E13

Àrea de Recerca:

Macroeconomia i Economia Internacional

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