This paper addresses firstly why people have to use fiat money and then why they are rationally willing to accept it from the perspective of general equilibrium by using dynamic game to determine agents' expectation of its purchasing power in unrevealed future. Its model formulates the process...

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...

This paper mainly addresses why people are rationally willing to cooperate with one another to accept fiat money from the perspective of decentralized sequential general equilibrium framework by using dynamic game to determine agents' expectation of nominal prices in unrevealed future. The model...

This paper mainly addresses why people are rationally willing to cooperate with one another to accept fiat money from the perspective of decentralized sequential general equilibrium framework by using dynamic game to determine agents' expectation of nominal prices in unrevealed future. The model...

Kiyotaki-Wright (1991, 1993) ensured fiat money's essentiality; but they abstract competition away. Therefore, Lagos-Wright (2005) added a frictionless centralized market to their model; however, their method should be improved. This paper directly substitutes perfectly competitive decentralized...

We build a one-period general equilibrium model with money. Equilibrium exists, and fiat money has positive value, as long as the ratio of outside money to inside money is less than the gains to trade available at autarky. We show that the nominal effects of government fiscal and monetary policy...

We are constructing an imperfect competition general equilibrium model, with non-consumable money and labor market; our toolkit is an equilibrium default model of Shubik-Wilson (1978). Our result has an ‘equilibrium volatility' simultaneously occurring at all three markets: labor, goods, and...

This paper extends the recent literature on equilibria with coordination failures to arbitrary convex sets of admissible prices. We introduce a new equilibrium concept, called quantity constrained equilibrium (QCE), giving a unified treatment to all cases considered in the literature so far. At...