The Lagos-Wright model a monetary model in which pairwise meetings alternate in time with a centralized meeting has been extensively analyzed, but always using particular trading protocols. Here, trading protocols are replaced by two alternative notions of implementability: one that allows only individual defections and one that also allows cooperative defections in meetings. It is shown that the rst-best allocation is implementable under the stricter notion without taxation if people are su ciently patient. And, if people are free to skip the centralized meeting, then lump-sum taxation used to pay interest on money does not enlarge the set of implementable allocations. (100 words)

This paper provides a theory of dynamic intermediation in over-the-counter markets. Intermediation arises so agents that meet infrequently can trade risky assets without collateral. When meeting the same counterparty again is unlikely, an agent develops a long-term relationship with another trader who then acts as an intermediary. In a relationship, two traders condition the terms of trade on information about past transactions. A trade-o¤ exists between forming many relationships and trading through intermediaries. First, maintaining relationships is costly. Second, agents intermediating transactions between others require a fee. I show that in equilibrium one agent intermediates all the trade in the market.

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We investigate the effects of monetary policy on asset prices in economies where assets are traded periodically in bilateral meetings. The trading mechanism is designed to maximize social welfare taking as given the frictions in the environment and monetary policy. We show that asset price "bubbles" emerge in a constrained-efficient monetary equilibrium only if liquidity is abundant and the first-best allocation is implementable. In contrast, if liquidity is scarce, assets are priced at their fundamental value in any constrainedefficient monetary equilibrium, in which case an increase in inflation has no effect on asset prices, but it reduces output and welfare.JEL codes: D82, D83, E40, E50

We characterize the equilibrium set of a two-good, pure-credit economy with limited commitment, under both pairwise and centralized meetings. We show that the set of equilibria derived under "not-tootight" solvency constraints (Alvarez and Jermann, 2000) commonly used in the literature is of measure zero in the whole set of Perfect Bayesian Equilibria. There exist a continuum of stationary equilibria, a continuum of endogenous credit cycles of any periodicity, and a continuum of sunspot equilibria, irrespective of the assumed trading mechanism. Equilibria featuring "too-tight" solvency constraints can generate growing credit limits over time, periodic credit shutdowns, and heterogeneous debt limits across ex-ante identical borrowers. Moreover, we provide examples of credit cycles that dominate, from a social welfare point of view, all equilibria with "not-too-tight" solvency constraints.

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General rightsThis document is made available in accordance with publisher policies. Please cite only the published version using the reference above. AbstractWe adopt mechanism design to study the effects of inflation on output, trade, and capital accumulation. Our theory captures multiple channels for individuals to respond to inflation: search intensity, market participation, and substitution between money and a higher return asset. We characterize constrained efficient allocations and show inflation has non-monotonic effects on the frequency of trades (extensive margin) and the total quantity traded (intensive margin). The model features monetary superneutrality for low inflation rates, non-linearities in trading frequencies, and substitution of money for capital for higher inflation rates. While these effects are difficult to capture in previous models, we show how they are intimately related by all being features of an optimal trading mechanism.JEL classification: D82, D83, E40, E50.