On the Micro-foundations of Money: The Capitol Hill Baby-Sitting Co-op
Preprint
- 1 March 2002
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
We suggest a new micro-foundation of money in which markets are well-organized but consumers' preferences are stochastic. In this model, we solve for stationary equilibria and show that there is an optimum quantity of money. The rational solution of our model is compared with actual behavior in a laboratory experiment. It turns out that the experiment gives support to our theoretical results.Keywords
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