Experimental evidence on money as a medium of exchange

Article Abstract:

An experimental examination of a model proposed by Kiyotaki and Wright in 1989 is discussed. Application of the model, which tackles the issue of how money arises as a medium of exchange, provides support for the theory that individuals are amenable to the use of a good as a medium of exchange. However, results also show that trading patterns differ from predicted patterns. Simulation studies indicate that while these deviations are initially rational responses, they persist because they have become less than optimal.

Interest rates, Simulation methods, Simulation

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A finite horizon monetary economy

Article Abstract:

Conventional thinking has it that there would be no demand for money in an economy with a finite duration. The terminal problem arises when money would not be accepted one period before the last period. It is shown that this does not have to be always the case. A random matching model is employed where the function of money is used as a medium of exchange by improving the double coincidence of wants problem. Economic activity is reduced as the end approaches but does not impede money's ability to hasten trade.

Money demand

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Equilibrium in auction and bargaining markets when agents can wait and search

Article Abstract:

Two market structures and two modes of trade were assessed to determine the equilibrium market structures. A single market constitutes an equilibrium for most parameter values when agents are allowed to choose whether to stay or search. When the numbers of buyers and sellers vary dramatically, a distinct evolutionary stable equilibrium that is composed of an auction market exists. On the other hand, two simultaneous auction markets can be found when the numbers are relatively close.

Market Research, Markets (Economics), Equilibrium (Economics), Walrasian model

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