capable of buying type i labor with money, converting type i labor into good i, and selling
good i for money. The number of shops of each type will evolve endogenously.
To trade with a shop, a person must form a trading relationship with it. Each person
may have a trading relationship with at most one shop that deals in his production good,
in which case that shop is his "employer" and he is one of its "employees," and at most
one shop that deals in each of his consumption goods, in which case that shop is one of his
"stores" and he is one of its "customers." Each person's trading relationships will evolve
endogenously.
Each shop of type i has a single owner whose production good is i. Operating the shop
entails a fixed overhead cost of F units of type i labor per week and a variable cost of one
unit of type i labor per unit of good i produced. All trade takes place at prices that are
posted in advance by the shop. Specifically, each shop posts a retail price and a weekly wage
rate, each of which may be adjusted periodically.
There is no depreciation or other physical storage cost. Goods produced but not sold in
a week are kept in inventory. Former shop owners continue to hold their "legacy inventories"
until these are sold in special "firesale" markets.
The government does not purchase goods or labor but it does issue money and bonds,
and it services the interest on bonds through a sales tax on every retail transaction. It
adjusts the ad valorem tax rate  once per year. The central bank pegs the interest rate i on
bonds by open market operations. It adjusts this rate every 4 weeks according to a Taylor
rule. In addition, the central bank is engaged in the forecasting of future GDP, inflation,
and interest rates.