A Theory of Money, Prices and the Rate of Interest. Part II. Fiat Money and Noncooperative Equilibrium in a Closed Economy,
Abstract
Fiat money is a type of paper or symbol with which any individual may buy most things by law. It has virtually no intrinsic value but immediately assumes a trading value when its shortage can prevent trades that would have been deemed profitable in a nonmonetary competitive equilibrium system. The paper sketches an approach to a theory of fiat money by investigating the properties of a noncooperative trading game embedded within a closed economic system. The game is not a c-game as the individuals must trade via the market. Among its conclusions are that inflation and deflation are not symmetric, and that it is not possible to define a noncooperative game involving borrowing w ithout specifying 'rules of borrowing' or a bankruptcy law. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1971
- Accession Number
- AD0738104
Entities
People
- Martin Shubik
Organizations
- RAND Corporation