Essays on monetary policy and liquidity effects

My dissertation consists of three chapters that employ search theory to investigate monetary issues such as liquidity effects, exchange rate dynamics and private money.; The first chapter of my dissertation models liquidity effects after a contractionary open market operation in a framework that highlights the frictions of limited participation in financial markets and search frictions in labor markets. It is shown that Lucas rigidities, with the aid of labor market rigidities, can generate more persistent liquidity effects under flexible prices. In addition, simulation results show that this adapted liquidity and labor search model can explain observed monetary dynamics in response to shocks of a plausible magnitude, and deliver substantial movements along a downward-sloping Beveridge curve.; The second chapter of my dissertation proposes a dynamic general-equilibrium two-country model incorporating limited participation with labor market search as well as pricing-to-market. This framework is then applied to analyze the distributional effects of monetary policy shocks on real activities across countries and to account for exchange rate dynamics. Rather than focusing on monopolistic competition models with nominal rigidities, the qualitative and quantitative implications of this model for international liquidity effects and exchange rate behavior in a flexible-price environment are assessed. This sheds light on the international transmission of monetary policy and lends support to models that explain exchange rate dynamics with monetary fundamentals.; The third chapter of my dissertation constructs a random-matching model with a clearinghouse and investigates the effects of private money on the volume of exchange, economic efficiency and social welfare in different monetary regimes. Under certain conditions, welfare in a monetary steady state with private money is strictly higher than that attained in a steady state in which bankers are prohibited from issuing private banknotes.