Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 168 Abstract:
A simple model of backed money without a store of value function is presented, discussed, and defended. The function of money in the model is to replace complex contingent contracts traded on a centralized exchange with simple trades in decentralized markets.
Keyword: Commodity money, Contracts, and Fiat money Subject (JEL): E40 - Money and Interest Rates: General and C10 - Econometric and Statistical Methods and Methodology: General
Creator: Bryant, John B. and Supel, Thomas M. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 116 Abstract:
It is commonly asserted that with excess plant capacity, expansive policy stimulates output and lowers unemployment without substantially boosting inflation, while at full capacity most of the impact is on inflation. This assertion is critically examined. First, two common definitions of capacity--engineering and economic—are examined and found to be nebulous. The concepts of supply and demand are older, but better. Full capacity is reinterpreted as points where the supply curve is steep and excess capacity as points where it is fairly flat. Then the "Keynesian" model in which stimulative policy shifts only the demand curve is compared to the "classical" model where stimulative policy shifts both demand and supply curves. For the former model the assertion on capacity utilization is correct, while in the latter it is not. Empirical tests are performed to determine whether measured capacity utilization is useful for predicting inflation. The tests are ambiguous, but certainly do not strongly favor capacity utilization.
Keyword: Aggregate demand, Aggregate economy, Engineering capacity, and Economic capacity Subject (JEL): E31 - Prices, business fluctuations, and cycles - Price level ; Inflation ; Deflation and E12 - General aggregative models - Keynes ; Keynesian ; Post-Keynesian
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 126 Abstract:
A model is presented in which demand deposits backed by fractional currency reserves and public insurance can be beneficial. The model uses Samuelson's pure consumption-loans model. The case for demand deposits, reserves, and deposit insurance rests on costs of illiquidity and incomplete information. The effect of deposit insurance depends upon how, and at what cost, the government meets its insurer's obligation--something which is not specified in practice. It remains possible that demand deposits and deposit insurance are a distortion, and reserve requirements serve only to limit the size of this distortion.
Keyword: Reserve requirements, Insolvency, Banks, Bank panic, and Bond reserve Subject (JEL): E58 - Monetary policy, central banking, and the supply of money and credit - Central banks and their policies and G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages
Creator: Bryant, John B. and Wallace, Neil. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 123 Abstract:
In "Open Market Operations in a Model of Regulated, Insured Intermediaries" [JPE, forthcoming] we show that once-for-all open market purchases need not be inflationary. Here we show this result can carry over to various stationary accommodation rules given stochastic deficits. In particular, the inflationary and deflationary effects of stochastic deficits are not offset by, nor welfare improved by, a monetary policy that leans toward monetarism. Moreover, a constant money growth rule is not in the class of stationary policies given the kind of stochastic deficit we analyze, which by itself is a serious indictment of the monetarist proposal.
Keyword: Accomodation rules, Debt, Monetarism, Inflation, and Deflation Subject (JEL): H62 - National budget, deficit, and debt - Deficit ; Surplus and E51 - Monetary policy, central banking, and the supply of money and credit - Money supply ; Credit ; Money multipliers
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 149 Abstract:
Game theory addresses a problem which is central to economics. Yet, according to the folklore of economics, game theory has failed. This paper argues that this is an incorrect interpretation of the game theory literature. When faced with a well-posed problem, game theory provides a solution. Procedures for facing game theory with well-posed problems are suggested, and examples of economic applications provided. The applications are Samuelson's fiat money model, Phelps' capital overaccumulation problem, multiple rational expectations equilibria, and a bargaining problem.
Keyword: Competitive equilibrium, Minimax-Nash, and Nash equilibrium Subject (JEL): C72 - Game theory and bargaining theory - Noncooperative games
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 92 Keyword: Price setting and Competition Subject (JEL): D41 - Market structure and pricing - Perfect competition
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 155 Abstract:
A new approach to market behavior is suggested. This approach has a coherent game theoretic foundaton, addresses such anomalous economic behaviors as strikes, rigid wages and unemployment, regulation of financial markets, de-presssion, and nonmarket allocation, and, more generally, provides insights for Finance, Oligopoly Theory, Industrial Organization, and Macroeconomics. The central theme of the approach is that exchange technologies are a basic building block in a model, as are tastes, endowments, and production technologies. Moreover, the key feature of an institution of exchange is that it allows the making of a binding final offer.
Keyword: Bargaining problem, Market behavior, and Competitive allocation Subject (JEL): D51 - General equilibrium and disequilibrium - Exchange and production economies and C72 - Game theory and bargaining theory - Noncooperative games
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 146 Abstract:
The determination of the mechanism for ordering strategies in a game theoretic conflict is the keystone of economic science, at least insofar as economics is to remain an outgrowth of that (otherwise relatively minor) school of English philosophy, Utilitarianism. A method for the solution of the general game is presented in this paper, and the implications for economic theorizing discussed.
Keyword: Games, Economic theory, Political economy, Multiple equilibria, and Minimax-Nash Subject (JEL): C72 - Game theory and bargaining theory - Noncooperative games and D50 - General equilibrium and disequilibrium - General