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The search-theoretic approach to monetary economics: a primer
The authors present simple versions of models used in the search-theoretic approach to monetary economics. They discuss results on the existence of monetary equilibria, the potential for multiple equilibria, and welfare. Using bilateral bargaining theory, they consider models where prices are fixed as well as those where prices are determined endogenously. After describing the frictions necessary to construct a model where money has an essential role, they conclude by reviewing many extensions and applications in the related literature
Generalized search-theoretic models of monetary exchange
This paper extends the literature on search-theoretic models of money in several ways. It provides results for general bargaining parameters, whereas previous papers consider only special cases. It also presents one version of the model in which agents holding money cannot produce and another in which they can. The former has been used in essentially all the previous literature, although the latter seems more natural for some purposes and avoids several undesirable implications. Since very little is known about this version, the authors analyze it in detail.