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dc.contributor.authorDong, Meien_US
dc.contributor.authorJiang, Janet Huaen_US
dc.date.accessioned2011-10-25en_US
dc.date.accessioned2011-12-15T12:56:22Z-
dc.date.available2011-12-15T12:56:22Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/53823-
dc.description.abstractWe study price posting with undirected search in a search-theoretic monetary model with divisible money and divisible goods. Ex ante homogeneous buyers experience match specific preference shocks in bilateral trades. The shocks follow a continuous distribution and the realization of the shocks is private information. We show that generically there exists a unique price posting monetary equilibrium. In equilibrium, each seller posts a continuous pricing schedule that exhibits quantity discounts. Buyers spend only when they have high enough preferences. As their preferences are higher, they spend more till they become cash constrained. Since inflation reduces the future purchasing power of money and the value of retaining money, buyers tend to spend their money faster in response to higher inflation. In particular, more buyers choose to spend money and buyers spend on average a higher fraction of their money. The model naturally captures the hot potato effect of inflation along both the intensive margin and the extensive margin.en_US
dc.language.isoengen_US
dc.publisherBank of Canada Ottawaen_US
dc.relation.ispartofseriesBank of Canada Working Paper 2011,22en_US
dc.subject.jelD82en_US
dc.subject.jelD83en_US
dc.subject.jelE31en_US
dc.subject.ddc330en_US
dc.subject.keywordEconomic modelsen_US
dc.subject.keywordInflation and pricesen_US
dc.titleMoney and price posting under private informationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn670491187en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Bank of Canada Working Papers

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