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Full-Text Articles in Social and Behavioral Sciences
The Value Of Fiat Money With An Outside Bank: An Experimental Game, Juergen Huber, Martin Shubik, Shyam Sunder
The Value Of Fiat Money With An Outside Bank: An Experimental Game, Juergen Huber, Martin Shubik, Shyam Sunder
Cowles Foundation Discussion Papers
Why people accept intrinsically worthless fiat money in exchange for real goods and services has been a longstanding question. There are many competing sufficient explanations that may confound each other in practice but can be individually tested in isolation experimentally. In this paper we examine a sufficient explanation of the value of fiat money through the existence of a debt instrument which allows consumption to be moved earlier in time. We present experimental evidence that the theoretical predictions about the behavior of such economies work reasonably well in a laboratory setting. The import of this finding for the theory of …
Sufficiency Of An Outside Bank And A Default Penalty To Support The Value Of Fiat Money: Experimental Evidence, Juergen Huber, Martin Shubik, Shyam Sunder
Sufficiency Of An Outside Bank And A Default Penalty To Support The Value Of Fiat Money: Experimental Evidence, Juergen Huber, Martin Shubik, Shyam Sunder
Cowles Foundation Discussion Papers
We present a model in which an outside bank and a default penalty support the value of fiat money, and experimental evidence that the theoretical predictions about the behavior of such economies, based on the Fisher-condition, work reasonably well in a laboratory setting. The import of this finding for the theory of money is to show that the presence of a societal bank and default laws provide sufficient structure to support the use of fiat money and use of the bank rate to influence inflation or deflation, although other institutions could provide alternatives.
Sufficiency Of An Outside Bank And A Default Penalty To Support The Value Of Fiat Money: Experimental Evidence, Juergen Huber, Martin Shubik, Shyam Sunder
Sufficiency Of An Outside Bank And A Default Penalty To Support The Value Of Fiat Money: Experimental Evidence, Juergen Huber, Martin Shubik, Shyam Sunder
Cowles Foundation Discussion Papers
We present a model in which an outside bank and a default penalty support the value of fiat money, and experimental evidence that the theoretical predictions about the behavior of such economies, based on the Fisher-condition, work reasonably well in a laboratory setting. The import of this finding for the theory of money is to show that the presence of a societal bank and default laws provide sufficient structure to support the use of fiat money and use of the bank rate to influence inflation or deflation, although other institutions could provide alternatives.