I would find it really useful to have a simple concrete mathematical model that demonstrates monetary disequilibrium. I could use it to troubleshoot my intuitions about monetary matters, develop new and better intuitions, and better explain the logic of monetary disequilibrium better. Unfortunately, I haven’t run across such a model and it looks like my current math and modeling skills are insufficient to produce one myself. Does anyone have a paper, book or post that presents mathematical model of monetary disequilibrium suited for at least one of these purposes?

Here’s an example of what I would expect such a model to look like:

An economy with a large number of two types of agents each producing a different good and an infinite number of periods. Both agents have the same type of utility function which has a term for how much of each good they consume in each period, how much of their production good they produce, and a term for the utility of money which is proportional to the amount they spend in each period. There should be some set of prices that characterize total equilibrium. We can investigate the effects of monetary disequilibrium by seeing how different price paths influence different agent’s utility, production and consumption over time.

### Like this:

Like Loading...

*Related*

## 1 comment

Comments feed for this article

April 7, 2012 at 12:31 pm

The backrub economy, a simple mathematical model of monetary disequilibrium « Good Morning, Economics[…] 7, 2012 in economics, macroeconomics | by jsalvati Since I have been unable to find a simple mathematical model of monetary disequilibrium, I’ve been interested in putting on together. Mathematical models help people narrow down […]