Liquidity, Quality, Production Cost, and Welfare in a Search Model of Money
Bibliographic Data
| ID | 9709629 |
|---|---|
| Authors | Young Sik Kim (0000-0003-4114-4935, Kyung Hee University), Shuntian Yao (0009-0009-2650-3910, Victoria University of Wellington) |
| Year | 2001 |
| Volume | 111 |
| Issue | 468 |
| Pages | 114-127 |
| Publication date | 2001-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/1468-0297.00591 |
| OpenAlex | W2101887702 |
| Language | EN |
| References cited | 6 |
This paper examines a search model of money with divisible commodities of high and low quality, while keeping the assumptions of indivisible money and unit‐inventory constraint. With no direct barter and a higher fixed cost of producing high relative to low quality, an increase in the money stock encourages the production of high‐quality output by trading off the larger trading opportunities against the significance of higher fixed cost. As long as the fixed‐cost differential between high and low quality is sufficiently small relative to the utility gain from high‐quality consumption, the quality improvement outweighs the negative effect of higher money stocks on aggregate production, and hence implies higher welfare
Constraint (computer-aided design · Consumption (sociology · Economics · Fixed cost · Market liquidity · Microeconomics · Monetary economics · Production (economics · Quality (philosophy · Stock (firearms · Welfare · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact
| Highly cited | No |
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