Money and finance with costly commitment

Money, Search and Costly Matchmaking

I examine the robustness of monetary equilibria in a random matching model where a more efficient mechanism for trade is available. Agents choose between two trading sectors: the search and the intermediated sector. In the former, trade partners arrive randomly and there is a trading externality. In the latter a costly matching technology provides deterministic double-coincidence matches. Multi...

Money, Banking, and Finance

Commitment vs. Flexibility with Costly Verification

A principal faces an agent who is better informed but biased towards higher actions. She chooses whether to audit the agent’s information and his permissible actions. We show that if the audit cost is small enough, a threshold with an escape clause (TEC) is optimal: the agent can select any action below a threshold, or request audit and the efficient action if the threshold is sufficiently bind...

Costly external finance and labor market dynamics

We study the role of agency frictions and costly external finance in cyclical labor market dynamics, with a focus on how credit-market frictions may amplify aggregate TFP shocks. The main result is that aggregate TFP shocks lead to large fluctuations of labor market quantities if the model is calibrated to the empirically observed countercyclicality of the finance premium. A financial accelerat...

Money, barter, and costly information acquisition ¬リニ

Endogenous information structure is analyzed in a search model of production and exchange under qualitative uncertainty by allowing agents to invest in an inspection technology at a fixed cost where incurring a higher cost permits quality to be recognized with higher probability. In any equilibria where agents acquire information, some bad commodities are always produced. The information acquis...