1. Consider the search-theoretic model of money from Kiyotaki and Wright (1993) in the version that...

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1. Consider the search-theoretic model of money from Kiyotaki and Wright (1993) in the version that has been discussed in the course. It was shown in the lecture that and where Ve A{1-3[1 MTII(II – X) — 7XII]} = Vm = VII{1 - B[1 – MTA(II – X) — TX²]}, (1 - M)TXU (1 − B)[1 – B(1 — TXII)] - > 0. Compare the difference Ve - Vm for the three stationary equilibria and give an economic inter- pretation of your results. 1. Consider the search-theoretic model of money from Kiyotaki and Wright (1993) in the version that has been discussed in the course. It was shown in the lecture that and where Ve A{1-3[1 MTII(II – X) — 7XII]} = Vm = VII{1 - B[1 – MTA(II – X) — TX²]}, (1 - M)TXU (1 − B)[1 – B(1 — TXII)] - > 0. Compare the difference Ve - Vm for the three stationary equilibria and give an economic inter- pretation of your results.