Abstract
The paper generalizes the Kiyotaki-Wright trade model by treatingthe trading period as a finite game, so Nash's theorem can be used to provethe existence of equilibrium, and by treating the economy as a Markovprocess, so an ergodic theorem can be used to show the existence ofequilibria with desirable properties (e.g., in which money exists). A Markovmodel of trade also allows us to add complexity to the economy withoutadding corresponding complexity to the analysis of the model's properties.The paper also provides artificial life simulations of the Markov economysuggesting that monetary equilibria are dynamically stable and do notrequire high levels of learning or information processing on the part ofagents.
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Gintis, H. A Markov Model of Production, Trade, and Money: Theory and Artificial Life Simulation. Computational & Mathematical Organization Theory 3, 19–41 (1997). https://doi.org/10.1023/A:1009615904648
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DOI: https://doi.org/10.1023/A:1009615904648