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A backwardly solvable search equilibrium model

Author

Listed:
  • Toru Hokari

    (Faculty of Economics, Keio University)

  • Shigeru Makioka

    (Graduate School of Economics, Keio University)

  • Masayuki Yao

    (Graduate School of Economics, Keio University)

Abstract

So-called “search equilibrium models” typically have multiple equilibria. In almost all studies on these models, only steady states are considered mainly because it is difficult to find non-stationary equilibria. This difficulty does not disappear even if we consider finite-horizon versions of these models. In this note, we propose an approach that might be useful to study non-stationary equilibria in these models. In particular, we consider a discrete-time and finite-horizon version of Diamond's (1982, JPE) model and show how to solve it backwardly. As an illustration, we compute a non-stationary equilibrium of a specific example, which exhibits a three-period cycle.

Suggested Citation

  • Toru Hokari & Shigeru Makioka & Masayuki Yao, 2013. "A backwardly solvable search equilibrium model," Economics Bulletin, AccessEcon, vol. 33(1), pages 234-246.
    • Handle: RePEc:ebl:ecbull:eb-12-00886
    as

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    References listed on IDEAS

    as
    1. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
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    More about this item

    Keywords

    search equilibrium; discrete time; finite horizon; non-stationary equilibria;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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