Default, Efficiency and Uniqueness

Cheng-Zhong Qin, Thomas Quint and Martin Shubik
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Cheng-Zhong Qin: Dept. of Economics, UC Santa Barbara
Thomas Quint: Dept. of Mathematics, University of Nevada, Reno

No 2095, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: An adequate description of economic dynamics requires the introduction of a monetary system including default penalties and expectations in a society whose economy utilizes money and credit. This essay notes and discusses several of the factors involved in the use of money and credit in a process oriented economy. It links these observations with the general equilibrium treatment of the same underlying economy and formulates a government guidance game where the government sets several key parameters in a monetary economy sufficient to select a unique equilibrium. Low information and error correction are noted. The links to the first and second welfare theorems of GE are also considered as is the setting of the price level.

Keywords: General equilibrium; Strategic market games; Uniqueness; Aggregation; Information; Disequilibrium; Minimal institutions; Playable games (search for similar items in EconPapers)
JEL-codes: C7 D50 E4 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-07
New Economics Papers: this item is included in nep-gth, nep-mac and nep-mon
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