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Monetary trading: an optimal exchange system

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  • Guilherme Carmona

Abstract

We show that monetary trading is simple, self-enforcing, symmetric, and irreducible in a natural framework. Furthermore, we will show that the utility for each economic agent is at least as big under the monetary system as under any other simple, self-enforcing, symmetric, and irreducible trading system of the same complexity. Thus, we rationalize the monetary nature of real-world trade as being an efficient way to achieve those properties.

Suggested Citation

  • Guilherme Carmona, 2002. "Monetary trading: an optimal exchange system," Nova SBE Working Paper Series wp420, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp420
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    References listed on IDEAS

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    Cited by:

    1. Guilherme Carmona & Patrick Leoni, 2003. "Equilibrium non-panic bank failures," Nova SBE Working Paper Series wp424, Universidade Nova de Lisboa, Nova School of Business and Economics.

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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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