Accession Number:

AD0738104

Title:

A Theory of Money, Prices and the Rate of Interest. Part II. Fiat Money and Noncooperative Equilibrium in a Closed Economy,

Descriptive Note:

Corporate Author:

RAND CORP SANTA MONICA CALIF

Personal Author(s):

Report Date:

1971-08-01

Pagination or Media Count:

63.0

Abstract:

Fiat money is a type of paper or symbol with which any individual may buy most things by law. It has virtually no intrinsic value but immediately assumes a trading value when its shortage can prevent trades that would have been deemed profitable in a nonmonetary competitive equilibrium system. The paper sketches an approach to a theory of fiat money by investigating the properties of a noncooperative trading game embedded within a closed economic system. The game is not a c-game as the individuals must trade via the market. Among its conclusions are that inflation and deflation are not symmetric, and that it is not possible to define a noncooperative game involving borrowing w ithout specifying rules of borrowing or a bankruptcy law. Author

Subject Categories:

  • Economics and Cost Analysis

Distribution Statement:

APPROVED FOR PUBLIC RELEASE