The Social Viability of Money

1. Front Matter

   Pages I-X

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2. Introduction

   1. Front Matter

      Pages 1-1

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   2. The Viability of Fiat Money

      • Joan Esteban

      Pages 3-24

3. The Overlapping Generations Model of an Exchange Economy

   1. Front Matter

      Pages 25-28

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   2. Dynamic Efficiency

      • Joan Esteban

      Pages 29-52

   3. Competitive Equilibria in a Barter. Overlapping Generations Economy

      • Joan Esteban

      Pages 53-76

   4. Monetary Equilibria

      • Joan Esteban

      Pages 77-102

4. The Core in Overlapping Generations Economies

   1. Front Matter

      Pages 103-103

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   2. A Characterization of the Core

      • Joan Esteban

      Pages 105-130

   3. Competitive Equilibria and the Core. One agent per generation

      • Joan Esteban

      Pages 131-160

   4. Competitive Equilibria and the Core. Many agents per generation

      • Joan Esteban

      Pages 161-193

5. Back Matter

   Pages 195-206

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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.

• Competitive Equilibria
• Game Theory
• Konkurrenz-Gleichgewicht
• Spieltheorie
• agents

• Institut d’Anàlisi Econòmica, CSIC, Universitat Autònoma de Barcelona, Bellaterra, Barcelona, Spain

  Joan Esteban

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