Wright 9631316 Search theory provides a new way to think about many issues in monetary economics. This project contributes to the foundations of monetary economics by extending in several directions some recent development in the literature that use search theory to formalize the role of money and related assets in the economy. The major recent development in this literature has been the use of bargaining theory to determine prices endogenously in the models, while previous versions more or less assumed that prices were fixed exogenously in order t focus on the process of trade (who exchanges with whom, using which objects as media of exchange, and so on). In terms of methods, the current proposal has three parts. First, it is argued that by using a simple special case of bargaining theory, one may derive such stronger results and one may therefore use the model to address more complicated questions than would have been possible in general. Second, it is suggested that there is potentially interesting new way to analyze government policy in these models. Finally, there are several technical or mathematical issues that need to be addressed. This research should eventually contribute to the analysis of currency reform, e.g., what are the costs and benefits of European currency integration.
