When the trading process is characterized by search frictions, traders may be rationed so markets need not clear. We build a general equilibrium model with transferable utility where the uncertainty arising from rationing is incorporated in the definition of a commodity, in the spirit of the...

We study the effects of inflation in a competitive search model where each buyer's utility is private information, and money is essential. The equilibrium is efficient at the Friedman rule, but inflation creates an inefficiency in the terms of trade. Buyers experience a preference shock after...

The low velocity of circulation of money implies that households hold more money than they normally spend. This behavior is explained if households face uncertain expenditure needs, so that they have a precautionary motive for holding money. We investigate this motive in a search model where...