Asset Prices, Liquidity, and Monetary Policy in the Search Theory of Money.

The article discusses a monetary asset-pricing framework including its main normative and positive policy implications. A bare-bones model that encompasses the key economic mechanisms is outlined together with the individual optimization problem and the equilibrium of the economy. The Pareto optimal allocation is explained including the implications of the propositions. The perturbations of the optimal monetary policy is presented along with that which consists of targeting a constant positive nominal interest rate.