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

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