The Great Capitol Hill Baby Sitting Co-op: Anecdote or Evidence for the Optimum Quantity of Money?

Thorsten Hens, Klaus Reiner Schenk-Hoppé () and Bodo Vogt

Journal of Money, Credit and Banking, 2007, vol. 39, issue 6, pages 1305-1333

Abstract: This paper studies a centralized market with idiosyncratic uncertainty and money as a medium of exchange from a theoretical as well as an experimental perspective. In our model, prices are fixed and markets are cleared by rationing. We prove the existence of stationary monetary equilibria and of an optimum quantity of money. The rational solution of our model, which is based on the assumption of individual rationality and rational expectations, is compared with actual behavior in a laboratory experiment. The theoretical results are strongly supported by this experiment. Copyright 2007 The Ohio State University.

Date: 2007
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Persistent link: http://EconPapers.repec.org/RePEc:mcb:jmoncb:v:39:y:2007:i:6:p:1305-1333

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