Gold, Fiat and Credit. An Elementary Discussion of Commodity Money, Fiat Money and Credit, Part II
AbstractIn this paper we present a series of models, all within the context of a simple two-good economy, which bring out the distinctions between the different types of money and financial institutions. The models emphasize the physical properties of the economic goods, moneys, and trading systems. In Part 1 of the paper, we covered models in which the money is a consumable storable; here in Part 2 we consider economies using durable money, fiat money, or credit. Under this framework we are able to successfully contrast the role of private money lenders, banks, bilateral credit systems, and credit clearinghouses. We are also able to model the importance of the bankruptcy or default penalty in supporting the use of fiat.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1460.
Length: 47 pages
Date of creation: Apr 2004
Date of revision:
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
- P10 - Economic Systems - - Capitalist Systems - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-27 (All new papers)
- NEP-HIS-2004-06-27 (Business, Economic & Financial History)
- NEP-LAW-2004-06-27 (Law & Economics)
- NEP-MAC-2004-06-27 (Macroeconomics)
- NEP-MON-2004-06-27 (Monetary Economics)
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- Martin Shubik & Eric Smith, 2005. "Fiat Money and the Natural Scale of Government," Cowles Foundation Discussion Papers 1509, Cowles Foundation for Research in Economics, Yale University.
- Huber, Juergen & Shubik, Martin & Sunder, Shyam, 2007. "Three Minimal Market Institutions: Theory and Experimental Evidence," Working Papers 27, Yale University, Department of Economics.
- Juergen Huber & Martin Shubik & Shyam Sunder, 2007.
"Three Minimal Market Institutions with Human and Algorithmic Agents: Theory and Experimental Evidence,"
Cowles Foundation Discussion Papers
1623, Cowles Foundation for Research in Economics, Yale University, revised Jun 2009.
- Huber, Juergen & Shubik, Martin & Sunder, Shyam, 2010. "Three minimal market institutions with human and algorithmic agents: Theory and experimental evidence," Games and Economic Behavior, Elsevier, vol. 70(2), pages 403-424, November.
- Juergen Huber & Martin Shubik & Shyam Sunder, 2007. "Three Minimal Market Institutions with Human and Algorithmic Agents: Theory and Experimental Evidence," Cowles Foundation Discussion Papers 1623R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2010.
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