Essays on consumption, savings and international finance--[microform]. (1991)
University Microfilms order no. UMI00298579.
A Microfoundation of Monetary Economics
In this lecture, I explain what the microfoundations of money are about and why they are necessary for monetary economics. Then, I review recent developments of a particular microfoundation of money,...
Welfare Improvement from Restricting the Liquidity of Nominal Bonds
In this paper I examine whether a society can improve welfare by imposing a legal restriction to forbid the use of nominal bonds as a means of payments for goods. To do so, I integrate a microfounded...
Frictional Assignment, Part II: Infinite Horizon and Inequality
In an infinite-horizon economy with matching frictions, I study the efficient assignment between workers of different skill levels and machines of different quality levels. Under some restrictions I...
Wage Differentials, Discrimination and Efficiency
In this paper I construct a search model of a large labor market in which workers are heterogeneous in productivity and (homogeneous) firms post wages and a ranking of workers to direct workers'...
A Divisible Search Model of Fiat Money.
This paper extends the Kiyotaki-Wright search model of fiat money to allow for divisible money and goods. The extension allows me to examine the standard issues on monetary economics, such as the...
This paper examines efficient and equilibrium allocations in an economy where agents with diverse characteristics are matched through a time-consuming process to produce output. This is cast in a...
A Fundamental Theory of Exchange Rates and Direct Currency Trades
In this paper we construct a two-country search monetary model to determine the nominal exchange rate between two fiat monies. Our model imposes natural restrictions on agents' opportunities for...
Unskilled Workers in an Economy with Skill-Biased Technology
This paper contributes to the search theory of unemployment by endogenously deriving matching functions and surplus sharing rule for skilled and unskilled workers from a wage-posting game. In...
The Extent of the Market and the Optimal Degree of Specialization
In this paper I examine the socially optimal allocation in a random matching economy. The optimal allocation is supported by punishment to defections, using the public record of agents transaction....
The Variability of Velocity of Money in a Search Model
We construct a dynamic equilibrium model where there is costly search in the goods market and the labor market. Incorporating shocks to money growth and productivity, we calibrate the model to the US...
Money, Price Dispersion and Welfare
We introduce heterogeneous preferences into a tractable model of monetary search to generate price dispersion, and then examine the effects of money growth on price dispersion and welfare. With...
Frictional Assignment, Part II: Infinite Horizon and Inequality
In this paper I study the assignment between machines of heterogeneous qualities and workers of heterogeneous skills in an infinite-horizon economy with matching frictions. I characterize first the...
Signalling in the Internet Craze of Initial Public Offerings
In this paper we analyze the clustering phenomenon of underpricing in initial public offerings (IPOs), where firms in a particular industry choose to issue their new shares at the same time and at...
Friedman Meets Hosios: Efficiency in Search Models of Money
Aleksander Berentsen, Guillaume Rocheteau, Shouyong Shi
In this paper we study the inefficiencies of the monetary equilibrium and optimal monetary policies in a search economy. We show that the same frictions that give fiat money a positive value generate...
A Fundamental Theory of Exchange Rates and Direct Currency Trades
In this paper we construct a two-country search model to determine the nominal exchange rate between two fiat monies. Our model allows agents to use any currency to trade for goods in all countries....
A Search-Theoretic Model of Bureaucracy and Corruption
We analyze bureaucracy and corruption in a market with decentralized exchange and lemons. Exchange is modelled as a sequence of bilateral, random matches. Agents have private information about the...
Nominal Bonds and Interest Rates: The Case of One-Period Bonds
This paper is the first step in the integration of the (search-theoretic) microfoundation of monetary theory into the fruitful analysis by Lucas (1990). I construct two search models, in which fiat...
Directed Search On the Job and the Wage Ladder
In this paper we characterize the equilibrium in a labor market where employed workers search on the job and firms direct the search by announcing wages and employment probabilities for the...
Liquidity, Interest Rates and Output
This paper integrates limited participation into monetary search theory to analyze the liquidity effects of open market operations. The centralized bonds market features limited participation and...
Tariffs, Unemployment, and the Current Account: An Intertemporal Equilibrium Model
This paper integrates labor market search into an intertemporal equilibrium model to analyze the dynamic macroeconomics effects of a tariff. The search friction creates a wedge between the marginal...
Search for a Monetary Propagation Mechanism
This paper examines a monetary propagation mechanism in an economy where exchanges in goods and labor markets involve costly search. It is shown that an increase in the money growth rate increases...
Currency Areas and Monetary Coordination
In this paper we integrate the recent development in monetary theory with international finance, in order to examine the coordination between two currency areas in setting long-run inflation. The...
Currency Areas and Monetary Coordination
Currency Area; Monetary Coordination
Frictional Assignment, Part II: Infinite Horizon and Inequality
In an infinite-horizon economy with matching frictions, I study the efficient assignment between workers of different skill levels and machines of different quality levels. Under some restrictions I...
Pricing and Matching with Frictions
Kenneth Burdett, Shouyong Shi, Randall Wright
Suppose that n buyers each want one unit and m sellers each have one or more units of a good. Sellers post prices, and then buyers choose sellers. In symmetric equilibrium, similar sellers all post...
Capital Accumulation and the Current Account in a Two-Country Model.
Michael B. Devereux, Shouyong Shi
This paper looks at the joint determination of international indebtedness and capital accumulation in a two-country model. National rates of time preference are endogenous, and adjust along an...
Publicity and the Clustering of IPO Underpricing
We explain why underpricing in IPOs can be large in magnitude and clustered, using a signalling model where firms have private information about their qualities (high or low). A novel feature is that...
Screening, Bidding, and the Loan Market Tightness
Bank loans are more available and cheaper for new and small businesses in the US in areas with highly concentrated banks than in areas with highly competitive banks. We explain this fact by analyzing...
Money and Prices: A Model of Search and Bargaining
This paper makes commodities divisible and incorporates bargaining into the search-theoretic model of money to determine the purchasing power of money (or price). It is shown that two monetary...
Credit and Money in a Search Model with Divisible Commodities
This paper examines the competition between money and credit in a search model with divisible commodities. It is shown that flat money can be valuable even though it yields a lower rate of return...
Unemployment and the Dynamic Effects of Factor Income Taxation
This paper introduces search unemployment into an intertemporal maximization model with capital accumulation. It characterizes the decentralized search equilibrium, examines the dynamic effects of...
Viewpoint: A microfoundation of monetary economics
In this lecture, I explain what the microfoundations of money are about and why they are necessary for monetary economics. Then, I review recent developments of a particular microfoundation of money,...
An Equilibrium Theory of Declining Reservation Wages and Learning
Francisco M. Gonzalez, Shouyong Shi
In this paper we consider learning from search as a mechanism to understand the relationship between unemployment duration and search outcomes as a labor market equilibrium. We rely on the assumption...
Pricing and Signaling with Frictions
In this paper, we introduce private information into a market with search frictions and evaluate the relative efficiency of two pricing mechanisms, price posting and bargaining. Each seller chooses...
International Borrowing, Specialization, and Unemployment in a Small Open Economy
Patrick N. Osakwe, Shouyong Shi
The authors show that an increase in international borrowing increases specialization and unemployment in a small open economy that is subject to terms-of-trade risks. The economy has a production...
Credit and Money in a Search Model with Divisible Commodities.
This paper examines the competition between money and credit in a search model with divisible commodities. It is shown that fiat money can be valuable even though it yields a lower rate of return...
A MODEL OF BUREAUCRACY AND CORRUPTION
We analyze bureaucracy and corruption in a market with decentralized exchange and "lemons." Exchange is modeled as a sequence of bilateral, random matches. Agents have private information about the...
Product Market and the Size-Wage Differential
Using directed search to model the product market and the labor market, I show that large plants can pay higher wages to homogeneous workers and earn higher expected profit per worker than small...
Weakly Nonseparable Preferences and Distortionary Taxes in a Small Open Economy.
This paper examines the dynamic effects of distortionary taxes in a small open economy. The employed utility function implies both endogenous rates of time preference and a tractable form of weak...
Shi, Shouyong, Epstein, Larry G
This paper proposes a utility function incorporating both habit formation and an endogenous rate of time preference in a manner consistent with the intuition of Irving Fisher regarding the influence...
Friedman Meets Hosios: Efficiency in Search Models of Money
Aleksander Berentsen, Guillaume Rocheteau, Shouyong Shi
This article studies optimal monetary policy in an economy with endogenous search decisions. We show that the same frictions that give fiat money a positive value generate an inefficient quantity of...
Michael B. Devereux, Shouyong Shi
While in principle, international payments could be carried out using any currency or set of currencies, in practice, the US dollar is predominant in international trade and financial flows. The...
Bargaining with Surplus Destruction
Lutz-Alexander Bush, Shouyong Shi, Quan Wen
In a two-player alternating-offer bargaining model, if one player can destroy the surplus to be allocated, then the value to bargain for is endogenous, except at the beginning. Even with complete...
Coordination, matching, and wages
We analyse the coordination problem in the labour market by endogenizing the matching function and the wage share. Each firm posts a wage to maximize the expected profit, anticipating how the wage...
Stochastic Relation Between Money and Capital in an Economy with Spatially Separated Markets
This paper examines the stochastic relationship between money and capital in an economy with spatially separated markets. The new ingredient of the model is that trades between markets may be...
We examine a search money model in which there is a symmetric coincidence of wants in all barter matches. However, when bargaining outcomes are asymmetric across matches, the barter economy is...
Asymmetric Information, Credit Rationing, and Economic Growth.
This paper shows that asymmetric information in capital goods development can enhance long-run economic growth. This growth-enhancing role occurs when new capital goods are highly productive and...
A Directed Search Model of Inequality with Heterogeneous Skills and Skill-Based Technology.
In this paper I analyse the directed search/matching problem in an economy with heterogeneous skills and skill-biased technology. A unique symmetric equilibrium exists and is socially efficient....
A Divisible Search Model of Fiat Money
This paper extends the Kiyotaki-Wright model of fiat money to allow for divisible money and goods. By severing the artificial link in the Kiyotaki-Wright model between the money supply and the number...
Search, Inflation, and Capital Accumulation
This paper constructs a model to integrate the search monetary theory into a neoclassical growth model. With divisible goods and money, the model is used to examine the relationship between money...
Product Market and the Size-Wage Differential
This paper constructs a model to show that plants differing in size pay different wages to homogeneous workers. A large plant can use its large capacity to satisify buyers in the product market more...
NOMINAL BONDS AND INTEREST RATES
In this article, I integrate the microfoundation of monetary theory with the model of limited participation to analyze the competition between nominal bonds and money. The market for government...
Unskilled workers in an economy with skill-biased technology
This paper contributes to the search theory of unemployment by endogenously generating matching functions for skilled and unskilled workers from a wage-posting game. The model is capable of producing...
Kenneth Burdett, Shouyong Shi, Randall Wright
The authors analyze markets where each of n buyers wants to buy one unit and each of m sellers wants to sell one or more units of an indivisible good. Sellers first set prices, then buyers choose...
Friedman meets Hosios: efficiency in search models of money
Aleksander Berentsen, Guillaume Rocheteau, Shouyong Shi
In this paper the authors study the inefficiencies of the monetary equilibrium and optimal monetary policies in a search economy. They show that the same frictions that give fiat money a positive...
Welfare improvement from restricting the liquidity of nominal bonds
In this paper I examine whether a society can improve welfare by imposing a legal restriction to forbid the use of nominal bonds as a means of payments for goods. To do so, I integrate a microfounded...
The Research Agenda: Search Theory beyond the Matching Function
Shouyong Shi is Associate Professor at the Department of Economics at Queen's University (Kingston, Canada). He has published extensively on search models, especially applied to monetary economics....
Directed Search for Equilibrium Wage-Tenure Contracts
I analyze the equilibrium in a labor market where firms offer wage-tenure contracts to direct the search of employed and unemployed workers. Each applicant observes all offers and there is no...
Search Theory; Current Perspectives
In this article I briefly review recent developments in search theory. Particular attention is given to the framework of directed search. I first illustrate the inefficiency that arises in the...
On-the-Job Search and Business Cycles
In this paper, we develop a tractable model of the labor market where workers search for jobs both while unemployed and while on the job. Search is directed in the sense that each worker chooses to...
Michael B. Devereux, Shouyong Shi
While in principle, international payments could be carried out using any currency or set of currencies, in practice, the US dollar is predominant in international trade and financial flows. The...
DIRECTED SEARCH ON THE JOB AND THE WAGE LADDER
We model a labor market where employed workers search on the job and firms direct workers' search using wage offers and employment probabilities. Applicants observe all offers and face a trade-off...
This paper examines the relationship between specialization and the use of money in two versions of the search-theoretic monetary model. The first version establishes a surprising result that...
research notes : Fashion and wealth accumulation
This paper examines the influence of fashion on wealth accumulation in an economy with two groups of agents. Fashion is modelled as an externality generated by a particular dependence of individual...
The extent of the market and optimal specialization
In this paper I examine how the socially optimal allocation, and specialization in particular, depends on the extent of the market. I interpret the society’s ability to keep transaction records as...
Money, price dispersion and welfare
We introduce heterogeneous preferences into a tractable model of monetary search to generate price dispersion, and then examine the effects of money growth on price dispersion and welfare. With...
Unskilled Workers in an Economy with Skill-Biased Technology
This paper contributes to the search theory of unemployment by endogenously generating matching functions for skilled and unskilled workers from a wage-posting game. The model is capable of producing...
This paper examines the time-consuming process of matching the two sides of a market each having diverse characteristics. This is cast in a labor market setting where workers of different skills need...
Market Integration, Matching and Wages
When it is costly for agents to find a match, integrating small markets into a larger one increases the matching difficulty. We examine such dependence of the number of matches on the market size by...
Screening, Bidding, and the Loan Market Tightness
Bank loans are more available and cheaper for new and small businesses in the U.S. in areas with highly concentrated banks than in areas with highly competitive banks. To explain this fact, we...
Efficient Search on the Job and the Business Cycle
We build a directed search model of the labor market in which workers’ transitions between unemployment, employment, and across employers are endogenous. We prove the existence, uniqueness and...
Efficient Search on the Job and the Business Cycle
We build a directed search model of the labor market in which workers' transitions between unemployment, employment, and across employers are endogenous. We prove the existence, uniqueness and...
An Equilibrium Theory of Learning, Search and Wages
Francisco M. Gonzalez, Shouyong Shi
We construct an equilibrium theory of learning from search in the labor market, which addresses the search behavior of workers, the creation of jobs, and the wage distribution as functions of...
Efficiency Improvement from Restricting the Liquidity of Nominal Bonds
This paper addresses why it is beneficial for a society to restrict the use of nominal bonds as a means of payment for goods. The model has a centralized asset market and a decentralized goods...
Friedman Meets Hosios: Efficiency in Search Models of Money
Aleksander Berentsen, Guillaume Rocheteau, Shouyong Shi
In this paper we study the inefficiencies of the monetary equilibrium and optimal monetary policies in a search economy. We show that the same frictions that give fiat money a positive value generate...
Screening, Bidding, and the Loan Market Tightness
Bank loans are more available and cheaper for new and small businesses in the U.S. in concentrated banking areas than in competitive banking areas. To explain this anomaly, we analyze banks'...
Directed Search for Equilibrium Wage-Tenure Contracts
I construct a theoretical framework in which firms offer wage-tenure contracts to direct the search by risk-averse workers. All workers can search, on or off the job. I characterize an equilibrium...