Cookies?
Library Header Image
LSE Research Online LSE Library Services

Macro-modelling, default and money

Goodhart, C. A. E., Romanidis, Nikolas, Tsomocos, Dimitri and Shubik, Martin (2017) Macro-modelling, default and money. Financial Markets Group Discussion Papers (755). Financial Markets Group, The London School of Economics and Political Science, London, UK.

[img] Text (DP755) - Published Version
Download (345kB)

Abstract

Mainstream macro-models have assumed away financial frictions, in particular default. The minimum addition in order to introduce financial intermediaries, money and liquidity into such models is the possibility of default. This, in turn, requires that institutions and price formation mechanisms become a modelled part of the process, a ‘playable game'. Financial systems are not static, nor necessarily reverting to an equilibrium, but evolving processes, subject to institutional control mechanisms themselves subject to socio/political development. Process-oriented models of strategic market games can be translated into consistent stochastic models incorporating default and boundary constraints.

Item Type: Monograph (Discussion Paper)
Official URL: https://www.fmg.ac.uk/
Additional Information: © 2017 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: A - General Economics and Teaching > A1 - General Economics > A10 - General
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E11 - Marxian; Sraffian; Institutional; Evolutionary
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
G - Financial Economics > G1 - General Financial Markets > G10 - General
Date Deposited: 02 Jun 2023 10:12
Last Modified: 14 Sep 2024 04:28
URI: http://eprints.lse.ac.uk/id/eprint/118968

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics