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Our most academic publication offers research and surveys on monetary policy, national and international developments, banking, and more. The content is written for an economically informed readership—from the undergraduate student to the PhD.

Vol. 92, No. 4 (Posted 2010-07-01)

Asset Prices, Liquidity, and Monetary Policy in the Search Theory of Money

by Ricardo Lagos

The author presents a search-based model in which money coexists with equity shares on a risky aggregate endowment. Agents can use equity as a means of payment, so shocks to equity prices translate into aggregate liquidity shocks that disrupt the mechanism of exchange.

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— A revised version of this article was concomitantly published in Federal Reserve Bank of Minneapolis <em>Quarterly Review.</em>

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