Three essays on random matching models and asset markets.

摘要

This thesis investigates various issues in monetary economics. The thesis consists of three essays which attempt to explore the implications of search theoretic framework developed by Kiyotaki and Wright (1989, 1991, 1993).;The first essay critically evaluates the contributions of search theoretic approach to monetary economics pioneered by Kiyotaki and Wright in their series of influential papers (1989, 1991, 1993). This paradigm has served as a workhorse to examine interesting issues in monetary theory and offers new insights. The fundamental contribution of this approach has been in endogenously generating the medium of exchange role for money. Search theoretic paradigm explains the emergence of a generally acceptable medium of exchange through the agents belief in its acceptability. The property of acceptability has a self-reinforcing nature. This is the essence of monetization of exchange. This approach needs to address satisfactorily the issue of price formation. The essay points out the various issues that the framework has to consider to make further progress.;The second essay extends the search framework to an analysis of asset markets. Several important dimensions of the asset market are captured. These include the rate of return, the volume of trade and the dispersion of prices of assets. Modeling of asset markets in a decentralized environment captures the time-consuming feature inherent in trading as agents try to contact potential trading partners. This approach is a novel alternative to the conventional Walrasian models where trading occurs in a fully integrated market, and the auctioneer coordinates trading instantaneously without incurring any real resources.;The third essay explores the implication of choosing the variable search intensity by agents in contacting potential trading partners. The economy is comprised of asset and goods traders who are actively searching to consummate mutually beneficial trades. Allowing agents to choose search intensities introduce positive and negative externalities which the agents ignore in their decision-making. The social planner plays a pivotal role in internalizing externalities and ensuring higher welfare for the agents in this economy.