Technological Heterogeneity in a Monetary Search Model and U.S. Money Demand

In this study, we incorporate heterogeneity in technology into a micro-founded monetary search framework to explain the recent trend in observed money demand, assuming technological heterogeneity so as to formalize the rise in high-tech innovations in the U.S. business sector that occurred in the second half of the 1990s. The results show that this incorporation of technological heterogeneity allows the model to better fit the dynamics of the U.S. money demand curve.