Gomis Porqueras, Pedro; Peralta-Alva, Adrian
Search models of monetary exchange commonly assume that terms of trade in anonymous markets are determined via Nash bargaining, which generally causes monetary equilibrium to be inefficient. Bargaining frictions add to the classical intertemporal distortion present in most monetary models, whereby agents work today to obtain cash that can be used only in future transactions. In this paper, we study the properties of optimal fiscal and monetary policy within the framework of Lagos and Wright...[Show more]
Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.