Skip to:
  1. Main navigation
  2. Main content
  3. Footer
Working Paper

Search, Money and Capital: A Neoclassical Dichotomy

Recent work has reduced the gap between search-based monetary theory and mainstream macroeconomics by incorporating into the search model some centralized markets as well as some decentralized markets where money is essential. This paper takes a further step towards this integration by introducing labor, capital and neoclassical firms. The resulting framework nests the search-theoretic monetary model and a standard neoclassical growth model as special cases. Perhaps surprisingly, it also exhibits a dichotomy: one can determine the equilibrium path for the value of money independently of the paths of consumption, investment and employment in the centralized market.

Suggested Citation

Aruoba, S. Borağan, and Randall Wright. 2002. “Search, Money and Capital: A Neoclassical Dichotomy.” Federal Reserve Bank of Cleveland, Working Paper No. 02-08.