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The Social Viability of Money

Competitive Equilibria and the Core of Overlapping Generations Economies

  • Joan Esteban

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 372)

Table of contents

  1. Front Matter
    Pages I-X
  2. Introduction

    1. Front Matter
      Pages 1-1
    2. Joan Esteban
      Pages 3-24
  3. The Overlapping Generations Model of an Exchange Economy

    1. Front Matter
      Pages 25-28
    2. Joan Esteban
      Pages 29-52
    3. Joan Esteban
      Pages 77-102
  4. The Core in Overlapping Generations Economies

    1. Front Matter
      Pages 103-103
    2. Joan Esteban
      Pages 105-130
  5. Back Matter
    Pages 195-206

About this book

Introduction

In this book overlapping generations economies are analysed from a game theoretical point of view and the social acceptability of consumption allocations is studied in infinite horizon models of pure exchange economieswith agents with finite lifetimes who behave cooperatively. The core of such economies and its relation with competitive equilibria, both walrasian and monetary and the essential characteristics of the overlapping generations model are examined. The author defines the problem of trust in intertemporal consumption allocations as a question of belonging or not to the core of economy and provides a full characterization of the core allocations for n-goods pure exchange economies with one agent per generation: a consumption allocation belongs to the core if and only it is Pareto optimal and Sequentially Individually Rational. From this it follows that for one commodity economies no consumption allocation involving intertemporal transfers can belong to the core of the economy. In other words, no monetary equilibrium is socially viable. This result is no longer true for many goods models. For that case it is demonstrated that there exist bounds on the real value of equilibrium money purchases beyond which monetary equilibria are not socially viableand with many agents in every generation it is shown that as the economy becomes large and monetary (as well as IOU) equilibria become eventually excluded from the core of the economy. These results provide an analytical rationale for the fact that in most countries fiat money is legal tender.

Keywords

Competitive Equilibria Game Theory Konkurrenz-Gleichgewicht Spieltheorie agents

Authors and affiliations

  • Joan Esteban
    • 1
  1. 1.Institut d’Anàlisi Econòmica, CSICUniversitat Autònoma de BarcelonaBellaterra, BarcelonaSpain

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-642-46755-4
  • Copyright Information Springer-Verlag Berlin Heidelberg 1991
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Springer Book Archive
  • Print ISBN 978-3-540-54649-8
  • Online ISBN 978-3-642-46755-4
  • Series Print ISSN 0075-8442
  • Buy this book on publisher's site