  We study the rise in the acceptability fiat money in a Kiyotaki-Wright
economy by developing a method that can determine dynamic Nash equilibria for a
class of search models with genuine heterogenous agents. We also address open
issues regarding the stability properties of pure strategies equilibria and the
presence of multiple equilibria. Experiments illustrate the liquidity
conditions that favor the transition from partial to full acceptance of fiat
money, and the effects of inflationary shocks on production, liquidity, and
trade.
