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Multistage Models of Monetary Exchange: An Elementary Discussion of Commodity Money, Fiat Money and Credit, Part 4

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  • Thomas Quint
  • Martin Shubik

Abstract

This paper concludes the study on the modeling of money and financial institutions, which began in Quint and Shubik (2005a and b), and Quint and Shubik (2007). This paper begins by going through some of the one-period models of trade, with and without a banking system, including a new ‘sell-all’ market. The main goal then is to extend these to multiperiod models. The analysis considers the conditions for the free financing of the float by fiat money and also derives the explicit conditions under which strategic default is optimal for the traders.

Suggested Citation

  • Thomas Quint & Martin Shubik, 2009. "Multistage Models of Monetary Exchange: An Elementary Discussion of Commodity Money, Fiat Money and Credit, Part 4," The IUP Journal of Monetary Economics, IUP Publications, vol. 0(1), pages 6-67, February.
  • Handle: RePEc:icf:icfjmo:v:07:y:2009:i:1:p:6-67
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    References listed on IDEAS

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    1. Petrovic, Pavle & Mladenovic, Zorica, 2000. "Money Demand and Exchange Rate Determination under Hyperinflation: Conceptual Issues and Evidence from Yugoslavia," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 785-806, November.
    2. Albert Marcet & Juan P. Nicolini, 2003. "Recurrent Hyperinflations and Learning," American Economic Review, American Economic Association, vol. 93(5), pages 1476-1498, December.
    3. Brock, William A., 1975. "A simple perfect foresight monetary model," Journal of Monetary Economics, Elsevier, vol. 1(2), pages 133-150, April.
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    5. Obstfeld, Maurice & Rogoff, Kenneth, 1983. "Speculative Hyperinflations in Maximizing Models: Can We Rule Them Out?," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 675-687, August.
    6. Salemi, Michael K & Sargent, Thomas J, 1979. "The Demand for Money during Hyperinflation under Rational Expectations: II," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 741-758, October.
    7. Evans, Jean Lynne & Yarrow, George Keith, 1981. "Some Implications of Alternative Expectations Hypotheses in the Monetary Analysis of Hyperinflations," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 61-80, March.
    8. Sargent, Thomas J & Wallace, Neil, 1973. "Rational Expectations and the Dynamics of Hyperinflation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 328-350, June.
    9. Bruno, Michael, 1989. "Econometrics and the Design of Economic Reform," Econometrica, Econometric Society, vol. 57(2), pages 275-306, March.
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    14. María-José Gutiérrez & Jesús Vázquez, 2004. "Explosive Hyperinflation, Inflation-Tax Curve, and Modeling the Use of Money," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(2), pages 311-311, June.
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    18. Evans, J Lynne, 1995. "The Demand for Money: Hyperinflation or High Inflation Traps," The Manchester School of Economic & Social Studies, University of Manchester, vol. 63(0), pages 49-56, Suppl..
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    Cited by:

    1. Thomas Quint & Martin Shubik, 2015. "The demonetization of gold: transactions and the change in control," Annals of Finance, Springer, vol. 11(1), pages 109-149, February.

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