### Abstract

Shocks to the stock of money that are observed with a one-period lag are introduced into the random matching model of money of Shi (1995) and Trejos-Wright (1995), a model designed to show that money helps facilitate trade. The shock follows a finite-state Markov process. It is shown that if the shock is almost perfectly persistent, then the equilibrium gives rise to a Phillips curve, a positive association between the current stock of money and the level of per capita output. Moreover, that association is stronger than in the same model without an information lag.

Original language | English (US) |
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Number of pages | 26 |

State | Published - Oct 19 2015 |

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## Cite this

Hu, T-W., & Wallace, N. (2015).

*The Phillips curve in a matching model*. http://taiweihu.weebly.com/uploads/6/3/1/9/631996/shocks-10-19-15-h.pdf