On the Micro-Foundations of Money: The Capitol Hill Baby-Sitting Co-Op
University of Zurich - Department of Banking and Finance; Norwegian School of Economics and Business Administration (NHH); Swiss Finance Institute (Zurich Center)
Klaus Reiner Schenk-Hoppé
University of Leeds - Leeds University Business School; University of Leeds - School of Mathematics; Norwegian School of Economics (NHH) - Department of Finance
University of Bielefeld - Institute of Mathematical Economics (IMW)
HWWA Working Paper No. 255
This paper contributes to the micro-foundation of money in centralized markets with idiosyncratic uncertainty. It shows existence of stationary monetary equilibria and ensures that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. The experiment gives support to the theoretical approach.
Number of Pages in PDF File: 24
Keywords: micro foundations of money, optimal, quantity of money
JEL Classification: C73, C91, C92, E40, E41, E42working papers series
Date posted: January 8, 2004 ; Last revised: November 21, 2011
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