Fiat exchange in finite economies

Dan Kovenock and Casper G. de Vries

No 23/1995, Bank of Finland Research Discussion Papers from Bank of Finland

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.

Date: 1995
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Related works:
Journal Article: Fiat Exchange in Finite Economies (2002)
Working Paper: Fiat Exchange in Finite Economies (1995)
Working Paper: Fiat Exchange in Finite Economies (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1995_023

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