TY - JOUR
T1 - Search, inflation and capital accumulation
AU - Shi, Shouyong
N1 - Funding Information:
This paper builds on, but substantially differs from, a section of an earlier paper circulated under the title “A simple divisible search model of fiat money”. I am grateful to a referee and an associate editor (Stephen Williamson) for comments and suggestions that have led to significant improvements upon the first draft. I have also benefited from comments by Merwan Engineer and participants of the conference on “Exchanges in Search Equilibrium” at Penn State University. Financial support from the Social Sciences and Humanities Research Council of Canada is gratefully acknowledged. All errors are mine alone.
PY - 1999/8
Y1 - 1999/8
N2 - This paper constructs a model to integrate the search monetary theory into a neoclassical growth model. With divisible goods and money, the model is used to examine the relationship between money growth and capital accumulation. The framework uncovers a distinct extensive effect that an increase in the money growth rate increases the frequency of successful trades by increasing the number of agents in the market. This positive extensive effect on the number of trades can dominate the conventional negative intensive effects of money growth on individuals' labor input and real money balance, in which case increasing the money growth rate increases aggregate capital and output.
AB - This paper constructs a model to integrate the search monetary theory into a neoclassical growth model. With divisible goods and money, the model is used to examine the relationship between money growth and capital accumulation. The framework uncovers a distinct extensive effect that an increase in the money growth rate increases the frequency of successful trades by increasing the number of agents in the market. This positive extensive effect on the number of trades can dominate the conventional negative intensive effects of money growth on individuals' labor input and real money balance, in which case increasing the money growth rate increases aggregate capital and output.
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U2 - 10.1016/S0304-3932(99)00016-1
DO - 10.1016/S0304-3932(99)00016-1
M3 - Article
AN - SCOPUS:0002231077
SN - 0304-3932
VL - 44
SP - 81
EP - 103
JO - Journal of Monetary Economics
JF - Journal of Monetary Economics
IS - 1
ER -