Paper #567

Título:

A search theory of money and commerce with Neoclassical production

Autor:

Miquel Faig

Fecha:

Septiembre 2001

Resumen:

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 in�ation 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.

Palabras clave:

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

Códigos JEL:

E40, E52, E13

Área de investigación:

Macroeconomía y Economía Internacional

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