On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op

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

No iewwp108, IEW - Working Papers from Institute for Empirical Research in Economics - IEW

Abstract: 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.

Keywords: micro foundations of money; optimal quantity of money (search for similar items in EconPapers)
JEL-codes: C91 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp

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Related works:
Working Paper: On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op (2003)
Working Paper: On the Micro-Foundations of Money: The Capitol Hill Baby-Sitting Co-op (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:zur:iewwpx:108

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