Essays on monetary macroeconomics

Chapter I introduces the idea of "learning-by-shopping" into a transactions cost technology in a monetary dynamic general equilibrium model. For a given amount of consumption purchases, the more cash the consumer has, the more probable that his consumption transactions go through after visiting only a few stores, but the less chance for him to know about acceptable methods of payment in different stores. This information makes future transactions less costly for a given amount of money balances. Hence, the stock of knowledge is negatively related to the amount of past real balances. Optimization by the agent implies a more generalized money demand relationship including lagged real balances. The generalized method-of-moments (GMM) estimation results show that the effect of lagged real balances on current transactions cost is consistent with the notion of learning-by-shopping.; Chapter II illustrates the power loss due to lack of distributional information in the GMM-based overidentifying restrictions test in the context of a linear model where the maximum likelihood (ML)-based likelihood ratio (LR) test is used as a benchmark that defines "good" power. A Monte Carlo study shows that when the errors are AR(1) and the value of the unknown AR(1) parameter is large but less than one, the power loss of the GMM-based test relative to the LR test becomes substantial. However, the power of the GMM-based test is increasing in the number of truncation lags in estimating consistent covariance matrix.; Chapter III studies the implications of endogenous information structure for barter and monetary exchange under private information in the context of a search-theoretic model. Agents choose optimal information by acquiring an inspection technology at a fixed cost where incurring a higher fixed cost permits quality to be recognized with higher probability. The use of fiat money can make welfare improvements as compared with barter exchange because it leads to the saving of information costs.