Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301212 
Year of Publication: 
2024
Series/Report no.: 
KOF Working Papers No. 519
Publisher: 
ETH Zurich, KOF Swiss Economic Institute, Zurich
Abstract: 
I develop and analyze a monetary model with liquid equity. Equity is a claim on the profits of firms acting as sellers in the search-and-matching market. Buyers in that market devote search to obtain matches with firms, and use the equity to relax a liquidity constraint. The dual nature of equity in the search-and-matching market entails a strategic complementary in search operating through buyers' liquidity constraint, and it gives rise to endogenous booms and busts. The economy is stable in an inflation-targeting regime if combined with asset purchases, meaning the government effectively puts a floor below the value of equity.
Subjects: 
coordination
equity
liquidity
money-search
sunspots
JEL: 
E32
E40
E44
E52
G10
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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