Advertisement

Journal of Economics

, Volume 55, Issue 2, pp 123–150 | Cite as

A strategic market game with a mutual bank with fractional reserves and redemption in gold

A continuum of traders
  • M. Shubik
  • D. P. Tsomocos
Articles

Abstract

We utilize the strategic market game approach to analyze the role and function of a mutual bank with variable fractional reserves, redemption in gold, and endogenous interest rate formation. We specify the conditions of enough money and its distribution. Using the continuum of traders model, we show existence and optimality for the case ofno bankruptcy as well as for the case in which there exists the potentiality of bankruptcy. Finally, we analyze the relationship of the gearing ratio and the bankruptcy penalty with respect to the resulting equilibrium allocations.

Keywords

Gold Interest Rate Economic Theory Rate Formation International Economic 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Berge, C. (1963):Topological Spaces. New York: Macmillan.Google Scholar
  2. Burden, R. L., and Faires, J. D. (1985):Numerical Analysis. Boston: P. W. S. Publishers.Google Scholar
  3. Dubey, P., and Geanakoplos, J. (1989a): “Existence of Walras Equilibrium Without a Price Player or Generalized Game.” CFDP # 912.Google Scholar
  4. Dubey, P.: (1989b): “Liquidity and Bankruptcy with Incomplete Markets: Pure Exchange.” CFDP # 900.Google Scholar
  5. Dubey, P., and Shubik, M. (1978): “The Non-cooperative Equilibria of a Closed Trading Economy with Market Supply and Bidding Strategies.”Journal of Economic Theory 17: 1–20.Google Scholar
  6. — (1988): “A Note on an Optimal Garnishing Rule.”Economics Letters 27: 5–6.Google Scholar
  7. Dubey, P., Geanakoplos, J., and Shubik, M. (1987): “The Revelation of Information in Strategic Market Games: A Critique of Rational Expectations Equilibrium.”Journal of Mathematical Economics 16: 105–137.Google Scholar
  8. Dubey, P. (1988): “Bankruptcy and Efficiency in a General Equilibrium Model with Incomplete Markets.” CFDP # 879.Google Scholar
  9. Grandmont, J. M. (1983):Money and Value. Cambridge: Cambridge University Press.Google Scholar
  10. Grandmont, J. M., and Younes, Y. (1972): “On the Role of Money and the Existence of a Monetary Equilibrium.”Review of Economic Studies 39: 355–372.Google Scholar
  11. Keynes, J. M. (1958):A Treatise on Money, Vol. I. New York: Macmillan (first ed. 1930).Google Scholar
  12. Knapp, G. F. (1905):Staatliche Theorie des Geldes. Leipzig: Duncker & Humblot.Google Scholar
  13. Ricardo, D. (1965):The Principles of Political Economy and Taxation. London: J. M. Dent & Sons (based on 3rd ed. 1821).Google Scholar
  14. Shapley, L. S., and Shubik, M. (1977): “Trade Using One Commodity as a Means of Payment.”Journal of Political Economy 85: 937–968.Google Scholar
  15. Shubik, M. (1972): “Commodity Money, Oligopoly, Credit and Bankruptcy in a General Equilibrium Model.”Western Economic Journal 10: 24–38.Google Scholar
  16. — (1985): “A Note on Enough Money in a Strategic Market Game with Complete or Fewer Markets.”Economics Letters 19: 231–235.Google Scholar
  17. Shubik, M. (1986): “Enough Commodity Money and the Selection of a Unique Competitive Equilibrium.” CFDP # 804.Google Scholar
  18. — (1987): “The Unique Minimal Cash Flow Competitive Equilibrium.”Economics Letters 25: 303–306.Google Scholar
  19. — (1990): “The Transactions Trust Demand for Money.”Journal of Economics 52: 211–232.Google Scholar
  20. Shubik, M., and Wilson, C. (1977): “Optimal Bankruptcy Rule in a Trading Economy Using Fiat Money.”Journal of Economics 47: 337–354.Google Scholar
  21. Shubik, M., and Yao, S. (1989): “The Transactions Cost of Money (A Strategic Market Game Analysis).”Mathematical Social Sciences 20: 99–114.Google Scholar
  22. Vicker, R. (1975):The Realms of Gold. New York: Scribner's.Google Scholar

Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • M. Shubik
    • 1
  • D. P. Tsomocos
    • 1
  1. 1.Cowles Foundation for Research in EconomicsYale UniversityNew HavenUSA

Personalised recommendations