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ON THE MICRO-FOUNDATIONS OF MONEY: THE CAPITOL HILL BABY-SITTING CO-OP
Category: Economic Theory
Monetary Theory II Tuesday 27th August 2002, 09:30 - 11:00, Room: 1.6
Session Chair(s):
Andrew Levin, Federal Reserve Board, UNITED STATES and Christopher Erceg, Federal Reserve Board, UNITED STATES
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Abstract:
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We suggest a new micro-foundation of money in which markets are
well-organized but consumers' preferences are stochastic. In this
model, we solve for stationary equilibria and show that there is
an optimum quantity of money. The rational solution of our model
is compared with actual behavior in a laboratory experiment. It
turns out that the experiment gives support to our theoretical
results.
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Find this file in the \Papers\1700\ folder of this CD-ROM.
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