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| Toru Hokari, Shigeru Makioka and Masayuki Yao |
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| ''A backwardly solvable search equilibrium model'' |
| ( 2013, Vol. 33 No.1 ) |
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| 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. |
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| Keywords: search equilibrium, discrete time, finite horizon, non-stationary equilibria |
JEL: C6 - Mathematical Methods and Programming: General
J6 - Mobility, Unemployment, and Vacancies: General |
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| Manuscript Received : Dec 12 2012 | | Manuscript Accepted : Jan 25 2013 |
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