SFI Working Paper Abstract
1998
| Title: | The Dynamics of Money |
| Author(s): | Per Bak, Simon F. Nørrelykke, and Martin Shubik |
| Files: | [postscript] [pdf] |
| Paper #: | 98-11-102 |
| Abstract: | General equilibrium theory in economics defines the relative prices for goods and services, but does not fix the absolute values of prices. We present a theory of money in which the value of money is a time dependent "strategic variable," to be chosen by the individual agents. The idea is illustrated by a simple network model of monopolistic vendors and buyers. The indeterminacy of the value of money in equilibrium theory implies a soft "Goldstone mode," leading to large fluctuations in prices in the presence of noise. |