Default, Efficiency and Uniqueness

40 Pages Posted: 12 Jul 2017

See all articles by Cheng-Zhong Qin

Cheng-Zhong Qin

University of California, Santa Barbara (UCSB) - Department of Economics

Thomas Quint

University of Nevada-Reno, Department of Mathematics

Martin Shubik

Yale University - School of Management; Yale University - Cowles Foundation

Date Written: July 10, 2017

Abstract

An adequate description of economic dynamics requires the introduction of a monetary system including default penalties and expectations in a society whose economy utilizes money and credit. This essay notes and discusses several of the factors involved in the use of money and credit in a process oriented economy. It links these observations with the general equilibrium treatment of the same underlying economy and formulates a government guidance game where the government sets several key parameters in a monetary economy sufficient to select a unique equilibrium. Low information and error correction are noted. The links to the first and second welfare theorems of GE are also considered as is the setting of the price level.

Keywords: General Equilibrium, Strategic Market Games, Uniqueness, Aggregation, Information, Disequilibrium, Minimal Institutions, Playable Games

JEL Classification: C7, D50, E4

Suggested Citation

Qin, Cheng-Zhong and Quint, Thomas and Shubik, Martin, Default, Efficiency and Uniqueness (July 10, 2017). Cowles Foundation Discussion Paper No. 2095, Available at SSRN: https://ssrn.com/abstract=2999991 or http://dx.doi.org/10.2139/ssrn.2999991

Cheng-Zhong Qin

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

Thomas Quint

University of Nevada-Reno, Department of Mathematics ( email )

1664 North Virginia
Reno, NV 89557
United States
775-784-1366 (Phone)
775-784-6378 (Fax)

Martin Shubik (Contact Author)

Yale University - School of Management ( email )

Box 208200
New Haven, CT 06520-8200
United States

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3694 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://cowles.econ.yale.edu/P/au/d_shubik.htm

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