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A NOTE ON MONOTONE COMPARATIVE STATICS FOR MONETARY DIRECTED SEARCH MODELS

Published online by Cambridge University Press:  16 September 2019

Michael Choi
Michael Choi*
Affiliation:
University of California-Irvine
*
Address correspondence to: Michael Choi, Department of Economics, University of California-Irvine, 3151 Social Science Plaza, Irvine, CA 92697-5100, USA. e-mail: [email protected].
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Abstract

This note uses monotone methods to derive two sets of comparative statics results for monetary directed search models. First, it characterizes the impact of a higher inflation rate or a higher cost of using credit on market outcomes, regardless of the choice of matching function. Second, the seller-to-buyer ratio, output level, and money demand increase as the matching function becomes more efficient in a log-supermodular sense. I also consider an extension with endogenous search intensity and show that search intensity and trade volume always decrease in the nominal interest rate.

Keywords

Directed SearchMoneyLog-SupermodularMonotone Comparative Statics
Type
Note
Information
Macroeconomic Dynamics , Volume 25 , Issue 6 , September 2021 , pp. 1625 - 1634
Copyright
© Cambridge University Press 2019

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Footnotes

I thank Guillaume Rocheteau and Randall Wright for many useful comments. All errors are my own.

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