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Fiat Exchange in Finite Economies

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  • Kovenock, D.
  • De Vries, C.G.

Abstract

The state of the art of rendering fiat money valuable is either to impose a boundary condition, or to make the boundary condition unimportant by using infinities concerning the sequence of markets and/or the number of agents, so as to circumvent backward induction.We present two models of fiat exchange in deliberately finite economies in which the usage is not imposed.In the first approach agents have incomplete information about their relative position in the trade cycle.The second approach relies on the possibility that multiple non-monetary equilibria of the one-shot game can support monetary equilibria in the repeated game.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Kovenock, D. & De Vries, C.G., 1995. "Fiat Exchange in Finite Economies," Purdue University Economics Working Papers 1079, Purdue University, Department of Economics.
    • Handle: RePEc:pur:prukra:1079
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    Keywords

    MONEY; ECONOMIC MODELS;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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