We examine incentives for network-specific investment and the implications for network governance. We model an environment in which participants that make payments over a network can invest in a technology that reduces the marginal cost of using the network. A network effect results in multiple...

Modeling -- Foundation -- A model economy -- What is money? -- Money and the level of economic well-being -- Money in a classical economy -- Money in a Keynesian economy -- Should monetary policy be active? -- Is monetary policy active? -- Measuring monetary services -- Organizing the production...

Legislators are calling for a “systemic risk regulator”, in part to provide an early warning of financial conditions that threaten the real economy. To succeed, however, we need a forward-looking measure of systemic risk. Even more, we need a measure that varies with “pollution” from...

We consider an environment in which participants make payments over a network and can invest in a technology that reduces the marginal cost of using the network. A network effect results in multiple equilibria; either all agents invest and usage of the network is high or no agents invest and...