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Barley, Gold, or FiatToward a Pure Theory of Money$
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Thomas Quint and Martin Shubik

Print publication date: 2014

Print ISBN-13: 9780300188158

Published to Yale Scholarship Online: May 2014

DOI: 10.12987/yale/9780300188158.001.0001

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Multiperiod Models of Trade

Multiperiod Models of Trade

Chapter:
(p.269) Chapter 16 Multiperiod Models of Trade
Source:
Barley, Gold, or Fiat
Author(s):

Thomas Quint

Martin Shubik

Publisher:
Yale University Press
DOI:10.12987/yale/9780300188158.003.0016

This chapter covers multiperiod versions of our models. In the first such model, with no loan market, there are T time periods, with players deriving utility from consumption of the two goods each period (discounted over time in the usual economics way), and from the (discounted) salvage value of leftover fiat at the end of the game. The amount of money on hand at the beginning of any period is a function of how much was spent (and taken in) during the previous period. Prices are formed independently in each period, in the usual strategic market game way. We then add a strategic dummy bank that maintains a loan market with a constant interest rate of rho. We point out that a simple alteration here could be used to model Ponzi schemes. We also consider a sell-all version of the above. Next, by appealing to the work of Bennie, we show how an overlapping generations model with cyclical endowments can be used to vary the money supply in the game over time.

Keywords:   accounting constraint, cyclical endowment, discrete time, multiperiod model, overlapping generations model

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