Aggregate Demand Management in Search Equilibrium
Journal of Political Economy1982Vol. 90(5), pp. 881–894
Citations Over TimeTop 1% of 1982 papers
Abstract
Equilibrium is analyzed for a simple barter model with identical risk-neutral agents where trade is coordinated by a stochastic matching process. It is shown that there are multiple steady-state rational expectations equilibria, with all non-corner solution equilibria inefficient. This implies that an economy with this type of trade friction does not have a unique natural rate of unemployment.
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