Lagos-Wright with a New Keynesian Flavor!

There is so much one can do with a simple 2 subperiod model. For a brief survey, take a look at this. More recently, however, I came across this yet another addition by Aruoba and Schorfheide in the latest issue of the American Economic Journal: Macroeconomics. The paper features a version of the Lagos-Wright (a 2 subperiod divisible goods divisible money search) model. The first subperiod is still the decentralized trade, but the second subperiod (centralized market) features a standard new Keynesian economy with rigid prices!

Leave a comment

Filed under money search

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s