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The Great Capitol Hill Baby Sitting Co-Op: Anecdote or Evidence for the Optimum Quantity of Money?


Thorsten Hens


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

Bodo Vogt


University of Bielefeld - Institute of Mathematical Economics (IMW)
June 6, 2006


Abstract:     
This paper studies a centralized market with idiosyncratic uncertainty and money as a medium of exchange from a theoretical as well as an experimental perspective. In our model, prices are fixed and markets are cleared by rationing. We prove the existence of stationary monetary equilibria and of an optimum quantity of money. The rational solution of our model, which is based on the assumption of individual rationality and rational expectations, is compared with actual behavior in a laboratory experiment. The theoretical results are strongly supported by this experiment.

Number of Pages in PDF File: 43

Keywords: Microeconomic foundation of money, optimum quantity of money, experimental monetary economics

JEL Classification: C73, C92, E41

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Date posted: June 22, 2006 ; Last revised: November 21, 2011

Suggested Citation

Hens, Thorsten, Schenk-Hoppé, Klaus Reiner and Vogt, Bodo, The Great Capitol Hill Baby Sitting Co-Op: Anecdote or Evidence for the Optimum Quantity of Money? (June 6, 2006). Available at SSRN: http://ssrn.com/abstract=910860 or http://dx.doi.org/10.2139/ssrn.910860

Contact Information

Thorsten Hens
University of Zurich - Department of Banking and Finance ( email )
Plattenstrasse 32
Zurich, 8032
Switzerland
+41-44 634 37 06 (Phone)
Norwegian School of Economics and Business Administration (NHH)
Helleveien 30
Bergen, 5045
Norway
Swiss Finance Institute (Zurich Center)
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland
Klaus Reiner Schenk-Hoppé (Contact Author)
University of Leeds - Leeds University Business School ( email )
Keyworth Building
Leeds, LS2 9JT
United Kingdom
+44 113 343 4513 (Phone)
+44 113 343 4495 (Fax)
HOME PAGE: http://www.schenk-hoppe.net
University of Leeds - School of Mathematics ( email )
Woodhouse Lane
Leeds, LS2 9JT
United Kingdom
+44 113 343 5187 (Phone)
+44 113 343 5090 (Fax)
HOME PAGE: http://www.schenk-hoppe.net
Bodo Vogt
University of Bielefeld - Institute of Mathematical Economics (IMW) ( email )
Postfach 100131
Bielefeld, D-33501
Germany
Feedback to SSRN (Beta)


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