Dynamics, cycles and sunspot equilibria in "genuinely dynamic, fundamentally disaggregative" models of money

This paper pursues a line of Cass and Shell, who advocate monetary models that are "genuinely dynamic and fundamentally disaggregative" and that incorporate "diversity among households and variety among commodities." Recent search-theoretic models fit this description. The authors show that, like overlapping generations models, search models generate interesting dynamic equilibria, including cycles, chaos, and sunspot equilibria. This helps explain how alternative models are related and lends support to the notion that endogenous dynamics and uncertainty matter, perhaps especially in monetary economies. Th authors also suggest that such equilibria in search models may be more empirically relevant than in some other models.