The Theory of Money and Financial Institutions: A Summary of a Game Theoretic Approach
AbstractA game theoretic approach to the theory of money and financial institution is given utilizing both the strategic and coalitional forms for describing the economy. The economy is first modeled as a strategic market game, then the strategic form is used to calculate several cooperative forms that differ from each other in their utilization of money and credit and their treatment of threats. It is shown that there are natural upper and lower bounds to the monetary needs of an economy, but even in the extreme structures the concept of "enough money" can be defined usefully, and for large economies the games obtained from the lower and upper bounds have cores that approach the same limit that is an efficient price system. The role of disequilibrium is then discussed.
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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 1572.
Length: 21 pages
Date of creation: Jul 2006
Date of revision:
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- Martin Shubik, 2007. "The Theory of Money and Financial Institutions: A Summary of a Game Theoretic Approach," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(2), pages 6-26, May.
- Martin Shubik, 2006. "The Theory of Money and Financial Institutions: A Summary of a Game Theoretic Approach," Levine's Bibliography 321307000000000299, UCLA Department of Economics.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-28 (All new papers)
- NEP-CBA-2006-07-28 (Central Banking)
- NEP-FMK-2006-07-28 (Financial Markets)
- NEP-GTH-2006-07-28 (Game Theory)
- NEP-ICT-2006-07-28 (Information & Communication Technologies)
- NEP-MAC-2006-07-28 (Macroeconomics)
- NEP-MON-2006-07-28 (Monetary Economics)
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