Consider the Kiyotaki-Wright model of monetary exchange. We make two changes to the

baseline model.

(a) Assume that if individuals are indifferent between trading or not, that they decide not

to trade. This would be the case if there were small costs associated with trading.

(b) Rather than living in an economy that lasts forever, assume that individuals live in an

economy that will cease to exist at some known finite time period.

What impact do you think this would have upon the use of money and our equilibrium

outcomes? Explain your reasoning.