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A strategic market game with seigniorage costs of Fiat money

Author

Listed:
  • Dimitrios P. Tsomocos

    (Financial Industry and Regulation Division, Bank of England, Threadneedle Street, London Ec2R 8AH, UK)

  • Martin Shubik

    (Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281, USA)

Abstract

A model that includes the cost of producing money is presented and the nature of the inefficient equilibria in the model are examined. It is suggested that if one acknowledges that transactions are a form of production, which requires the consumption of resources, then the concept of Pareto optimality is inappropriate for assessing efficiency. Instead it becomes necessary to provide an appropriate comparative analysis of alternative transactions mechanisms in the appropriate context.

Suggested Citation

  • Dimitrios P. Tsomocos & Martin Shubik, 2002. "A strategic market game with seigniorage costs of Fiat money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(1), pages 187-201.
    • Handle: RePEc:spr:joecth:v:19:y:2002:i:1:p:187-201
    Note: Received: September 5, 2000; revised version: May 3, 2001
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    Cited by:

    1. 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.
    2. Dmitry Levando, 2012. "A Survey Of Strategic Market Games," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 63-106, July - Se.
    3. F H Capie & Dimitrios P Tsomocos & Geoffrey E Wood, 2003. "E-barter versus fiat money: will central banks survive?," Bank of England working papers 197, Bank of England.
    4. Tsomocos, Dimitrios P., 2008. "Generic determinacy and money non-neutrality of international monetary equilibria," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 866-887, July.

    More about this item

    Keywords

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    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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