The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Search-and-Matching Models of Monetary Exchange

  • Randall Wright
Living reference work entry
DOI: https://doi.org/10.1057/978-1-349-95121-5_1941-1

Abstract

We review a class of equilibrium search (matching) models that can be used to study the trading process and develop a theory of money as a medium of exchange. Developing such a theory is one of the longest-standing issues in economics, and search-based models provide a natural framework in which to formalize venerable stories about money facilitating trade by avoiding the double coincidence of wants problem in pure barter. The approach provides a compelling microfoundation for monetary theory: it is based on sound economic thinking going back to the classical economists, brought up to date with modern and rigorous methods.

Keywords

Bargaining Barter Bellman equation Commodity money Fiat money Matching Microfoundations Money Multiple equilibria Overlapping generations models Search-and-matching models of monetary exchange Trigger strategies 

JEL Classifications

D4; D10 
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Copyright information

© The Author(s) 2008

Authors and Affiliations

  • Randall Wright
    • 1
  1. 1.