Applied Microeconomics, Fall Semester 2018 (First Half)

Wednesday, Period 3 at Room 514

Instructor: Yoshimasa Shirai


Please fill in the foam at

if you are going to participate in this class.


Evaluation: submission of solution to problem sets and a research proposal


Models of Search

Lecture 1. September 26

Why search models instead of competitive equilibrium models?
A Model of Sequential Search [lecture note1]

Optimal Stopping Rule I: discrete time

      McMillan and Rothchild (1994)

Lecture 2. October 3

Optimal Stopping Rule I: discrete time (continued)


Lecture 3. October 10

Optimal Stopping Rule II: continuous time


Lecture 4. October 17

Price Dispersion (A Model of Non-Sequential Search)

     Diamond (1971) and Burdett and Judd (1983).


Lecture 5. October 24

Wage Dispersion (A Model of Wage Differentials, Firm Size, and Unemployment)

     Burdett and Mortensen (1998)


Lecture 6. October 31

Equilibrium Unemployment and Productivity

     Mortensen and Pissarides (1994)


Midterm Exam November 7

Wrap up.



*Burdett and Judd (1983), gEquilibrium Price Dispersion,h Econometrica, 51, 955-970.


*Burdett and Mortensen (1998), gWage Differentials, Employer Size, and Unemployment,h International Economic Review, 39 (2): 257-273.


DeGroot, Maurice H. (1970), Optimal Statistical Decisions, McGraw-Hill (now published in Wiley Classics Library 2004).


*Diamond, Peter (1971), gA Model of Price Adjustment,h Journal of Economic Theory, 3: 156-168.


Diamond, Peter (1982), gAggregate Demand Management in Search Equilibriumh, Journal of Political Economy, 90 (5): 881-894. 


Kiyotaki, N and R. Wright (1993), gA Search Theoretic Approach to Monetary Economics,h American Economic Review, 83 (1), 63-77.


Lagos, R., G. Rochetau, and R. Wright (2017), gLiquidity: A New Monetarist Perspective,h Journal of Economic Lietrature, 55 (2): 371-440.


*McMillan, J. and M. Rothchild (1994), gSearch,h Handbook of Game Theory with Economics Applications, Vol. 2, Chapter 27, 905-927: Elsevier.


*Mortensen and Pissarides (1994), gJob Creation and Job Destruction in a Theory of Unemployment,h Review of Economic Studies, 61 (3): 397-415.


Pisarides, Christopher (2000), Equilibrium Unemployment Theory 2nd edition, Cambridge, MA: MIT Press.