OK, I guess I had in mind something significantly simpler. I am trying to build a model for gaining and sharing understanding. Therefore, I require analytic solutions or another way of characterizing the behavior of the model.
Here’s the problem I am trying to model. I want to model a multiple period monetary economy with money treated as a good and couple of other goods and monetary trade only. I am trying to model a minimal interesting model of this sort, so I don’t fundamentally care how many agents or other goods there are. I guess the model will probably have two representative agents, and two goods. My model should be ‘general equilibrium’ in the sense that it is modeling the whole economy, but obviously doesn’t need to have remotely complete markets. This seems like it should be possible to do without getting into anything especially fancy, but perhaps I misunderstand.
Alright, hopefully I can give useful recommendations by this point...
Varian’s Microeconomic Analysis is probably the best to learn the basics of consumer theory and GE analysis. Since these models don’t have any frictions, there isn’t any role for money. If you are interested in monetary models, try looking through Kiyotaki and Wright’s On Money as a Medium of Exchange or Shapley and Shubik’s Trade Using One Commodity as a Means of Payment. These are relatively accessible micro-founded models that should give you an idea of where to head, even if they don’t make complete sense now. I don’t think models like these have percolated into any textbooks yet.
OK, I guess I had in mind something significantly simpler. I am trying to build a model for gaining and sharing understanding. Therefore, I require analytic solutions or another way of characterizing the behavior of the model.
Here’s the problem I am trying to model. I want to model a multiple period monetary economy with money treated as a good and couple of other goods and monetary trade only. I am trying to model a minimal interesting model of this sort, so I don’t fundamentally care how many agents or other goods there are. I guess the model will probably have two representative agents, and two goods. My model should be ‘general equilibrium’ in the sense that it is modeling the whole economy, but obviously doesn’t need to have remotely complete markets. This seems like it should be possible to do without getting into anything especially fancy, but perhaps I misunderstand.
Do you have any advice?
Alright, hopefully I can give useful recommendations by this point...
Varian’s Microeconomic Analysis is probably the best to learn the basics of consumer theory and GE analysis. Since these models don’t have any frictions, there isn’t any role for money. If you are interested in monetary models, try looking through Kiyotaki and Wright’s On Money as a Medium of Exchange or Shapley and Shubik’s Trade Using One Commodity as a Means of Payment. These are relatively accessible micro-founded models that should give you an idea of where to head, even if they don’t make complete sense now. I don’t think models like these have percolated into any textbooks yet.
OK, thanks! Those are all helpful suggestions.