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The monetary character of trade, use of a common medium of exchange, is shown to be an outcome of economic general equilibrium in the presence of transaction costs and market segmentation (in trading posts with a separate budget constraint at each transaction). Commodity money arises...
Persistent link: https://www.econbiz.de/10010536381
This note describes an experiment, which is an extension of the experiment proposed by Levy and Bergen (1993). The experiment is designed to simulate an environment where something that is very similar to fiat money (i.e., is homogenous, durable, portable, storable, divisible, has no intrinsic...
Persistent link: https://www.econbiz.de/10005119382
We describe a multiproduct barter trading experiment in which students exchange real goods in an open market based on their own personal preference. The experiment is designed for simulating a pure exchange market in order to demonstrate the role of money and its functions in real economies by...
Persistent link: https://www.econbiz.de/10005125577
This study derives the monetary structure of transactions, the use of commodity or fiat money, endogenously from transaction costs in a segmented market general equilibrium model. Market segmentation means there are separate budget constraints for each transaction: budgets balance in each...
Persistent link: https://www.econbiz.de/10010536376
Commodity money arises endogenously in a general equilibrium model with convex transaction cost technology and with separate budget constraints for each transaction. Transaction costs imply differing bid and ask (selling and buying) prices. The most liquid good --- with the smallest...
Persistent link: https://www.econbiz.de/10010536514
We define a non-tâtonnement dynamics in continuous-time for pure-exchange economies with outside and inside fiat money. Traders are myopic, face a cash-in-advance constraint and play dominant strategies in a short-run monetary strategic market game involving the limit-price mechanism. The...
Persistent link: https://www.econbiz.de/10005510643
In the past few years the view has commonly been expressed that central banks follow `Taylor Rules' (as first promulgated by Henderson and McKibbin (1993)). We show that the appearance of such an interest rate rule – a ‘pseudo-Taylor rule’ – can be created by a standard macro model in...
Persistent link: https://www.econbiz.de/10005497796
This article develops a tractable graphical device for analyzing the stationary, stochastic overlapping generations economy. In this paper, the graphical device is applied to the theoretical study on stochastic bubbles per Weil (1987) and gives new insights into the issue.
Persistent link: https://www.econbiz.de/10010777105
This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, endogenously incomplete markets of financial securities, backed by collateral. Non-conventional monetary policy of injecting money results in three scenarios compatible with the equilibrium...
Persistent link: https://www.econbiz.de/10011025474
We propose a model in which money performs an essential role in the process of exchange, despite the presence of a multilateral clearing house. Agents are assumed to be anonymous and unable to make binding commitments. The clearing house can detect deviations but it cannot identify the...
Persistent link: https://www.econbiz.de/10010723120