---- Acknowledgements ----
We received comments from participants at the Society for Economic Dynamics Meeting in Vancouver (July 2006), the NBER Summer Institute in Cambridge (July 2006), and at the macroeconomic seminars at Stanford, Penn, LSE, UCLA and Saint Louis FED. Discussions with Ken Burdett, Dale Mortensen, Guillaume Rocheteau and Randy Wright led to significant improvements in the paper. Menzio gratefully acknowledges the financial support and the hospitality of the Hoover Institution. Moen gratefully acknowledges financial support from the Norwegian Research Council. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.