Guillaume Rocheteau

On the Efficiency of Monetary Exchange: How Divisibility of Money Matters

We use alternative assumptions about the divisibility of goods and money and the ability of agents to use lotteries on money to investigate to what extent the indivisibility of money is the cause for the typically inefficient production and consumption decisions in search-theoretic models of money. Our framework potentially generates three types of inefficiencies: the no-trade inefficiency, where no trade takes place even though it would be socially efficient to trade; and the too-much-trade and too-little-trade inefficiencies, where the quantities produced and exchanged are either larger or smaller than what the solution to a social planners problem would mandate. It is shown that while the no-trade and the too-much-trade inefficiencies are caused by the indivisibility of money, the too-little-trade inefficiency remains even when money is divisible unless it is sufficiently valued.

Working time regulation in a search economy with worker moral hazard

This paper analyzes the consequences of a working time reduction within a matching model with worker moral hazard. In the laissez faire, workers and employers bargain over wages and working hours. When the no-shirking condition (NSC) is binding, the number of working hours is lower than the level that would be negotiated in the case of perfect monitoring and a work-sharing policy increases aggregate employment. At the opposite, for low unemployment countries, the NSC does not bind and a working time regulation always worsens the labour market situation.

Equilibrium unemployment and wage formation with matching frictions and worker moral hazard

This paper synthesizes the shirking and the matching approaches of equilibrium unemployment in order to endogenize the wage formation process as a function of labour market conditions. The steady state equilibrium can take two forms depending on wether the no-shirking condition is binding or not. It is demonstrated that the efficiency wage approach is relevant when the unemployment rate is above a certain threshold. Futhermore, an efficiency wage is more likely when the disutility of effort is high, recruiting costs and workers bargaining power are low, inspections are unlikely and the workers productivity is weak.

La quantité optimale de monnaie dans un modèle avec appariements aléatoires

This article determines the optimum quantity of money for various extensions of the search-theoretic model of fiat money and examines the robustness of the Kiyotaki and Wrights results in the presence of money and inventory holdings. In the case of a bound on money holdings, the optimum quantity of money is reached when the distribution of money among agents is uniform. The choice of this upper bound by rational agents generates multiple equilibria.