Money with partially directed search

Partially directed search replaces the total randomness of monetary search models. Agents choose whether to stay in their production location or visit other locations. Each visiting agent randomly chooses one shop among many in each location. As in random matching models, a commodity or fiat object can endogenously become money, but the details are richer and conform better with evidence: any commodity can be money; the ‘‘best’’ commodity is the most likely money; fiat money can totally crowd out commodity money in an asymmetric environment; going shopping is more likely than door-to-door sales. The model nests Walrasian equilibria. r 2006 Elsevier B.V. All rights reserved