Generalized search-theoretic models of monetary exchange

Virtually all simple search models of money assume agents with money cannot produce, and so everyone has either 0 or 1 units of money in steady state. We alternatively assume agents can always produce, and simply restrict mon ey inventories to 0 or 1. This seems better for many issues; for example, i n the standard model it is difficult to interpret increases in the money su pply, because increasing the fraction of agents holding money decreases the economy's productive capacity. Our model avoids these problems and thus de livers more natural, and simpler, implications in many contexts. We compare results on existence, multiplicity, and welfare across models. (C) 2001 El sevier Science B.V. All rights reserved.