We propose a dynamic structural corporate model in which firms face imperfect capital markets and frictional product markets. We highlight the importance of the endogeneity of firms’ short-term cash flows and the endogeneity of the marginal value of liquidity in determining the interactions between investment, financing and product price setting decisions. Our primary goal is to develop a finan...

Search and matching frictions on financial and labor markets are introduced in a dynamic general equilibrium framework, affecting the dynamics of capital and employment adjustments. While prices are fully flexible and determined by money supply, money demand arises endogenously from financial market matching frictions that prevent some deposits from being channeled into productive investment. T...

How do financial frictions affect the optimal inflation rate? Can financial frictions alone annul the long-run super-neutrality of money? Should the inflation rate be higher in emerging market economies with less developed financial markets than in advanced economies, as is currently observed? To answer these questions we set up an incomplete markets model in which households choose portfolios ...

A generalised search model with matching on product, labour and financial markets is presented in order to analyse the impact of market frictions on the pass-through of shocks. The model includes an endogenous demand for money that arises from matching frictions on the financial market. Moreover, price posting on retail markets allows to establish a forward-looking Search Phillips Curve. The mo...

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