This paper provides a framework for monetary macro-policy, where the Central Bank intervenes on s... more This paper provides a framework for monetary macro-policy, where the Central Bank intervenes on short-term loans markets, alternatively by manipulating interest rates or money supply. Trades are subject to a cash-inadvance constraint and to a size restriction. Agents, who are assumed to be myopic, can try to get around the restriction on size by retrading goods in a series of round. They can also borrow cash on the short term loan market. We show that in an appropriately defined strategic market game and under a gainsto-trade hypothesis: 1) trades will lead to a Pareto efficient allocation but only if the number of rounds of trade is infinite; 2) the monetary exchange process is pinned down uniquely in both its real and nominal variables; 3) the money supply should grow sufficiently fast to prevent the trading process to get stuck in a local liquidity trap; 4) if the Central Bank follows the Taylor rule, the trading process is bound to fall into a local liquidity trap.
HAL (Le Centre pour la Communication Scientifique Directe), 2016
This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, e... more This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, endogenously incomplete markets of financial securities, durable goods and production. Short positions in financial assets and long-term loans are backed by collateral, the value of which depends on monetary policy. The decision to default is endogenous and depends on the relative value of the collateral to the loan. We show that Collateral Monetary Equilibria exist and prove a refinement of the Quantity Theory of Money that turns out to be compatible with the long-run non-neutrality of money. Moreover, only three scenarios are compatible with the equilibrium condition: 1) either the economy enters a liquidity trap in the first period; 2) or a credible expansionary monetary policy accompanies the orderly functioning of markets at the cost of running an inflationary risk; 3) else the money injected by the Central Bank increases the leverage of indebted investors, fueling a financial bubble whose bursting leads to debt-deflation in the next period with a non-zero probability. This dilemma of monetary policy highlights the default channel affecting trades and production, and provides a rigorous foundation to Fisher's debt deflation theory as being distinct from Keynes' liquidity trap.
L’accès de tous à des services énergétiques fiables et durables est-il compatible avec la poursui... more L’accès de tous à des services énergétiques fiables et durables est-il compatible avec la poursuite de la croissance du PIB et la lutte contre le réchauffement climatique, ainsi qu’avec les 14 autres Objectifs de développement durable (ODD) ? Cherchant à répondre à cette question, nous sommes conduits à interroger plus globalement la durabilité (au sens, par exemple, de l’empreinte écologique) des Objectifs eux-mêmes et leur compatibilité réciproque. Les droits de l’Homme et le projet démocratique seraient-ils, finalement, la référence – étrangement absente des ODD – susceptible de permettre à la communauté internationale de s’orienter au sein des 17 ODD et de les articuler, une fois consenti le deuil d’une harmonie préétablie qui les concilierait tous d’emblée
El objetivo de esta obra es analizar y defender veinte propuestas, cuya puesta en practica, espec... more El objetivo de esta obra es analizar y defender veinte propuestas, cuya puesta en practica, especialmente en Europa, permita una reforma del capitalismo que la crisis ha vuelto urgente y necesaria. El punto de partida es doble: 1. La vertiente financiera de la crisis, ligada al credito subprime, es ciertamente fundamental, pero no puede ser analizada independientemente de su vertiente economica, asociada con el credito de consumo, la relacion entre accionistas y ejecutivos de empresas, la tributacion de las empresas, etc. 2. La crisis actual no significa el fin del capitalismo liberal como tal, sino la incapacidad de determinado modelo capitalista de asegurar el desarrollo de las sociedades europeas. Se trata de un modelo (de origen anglosajon) que apunta, mediante la desregulacion, a centrar nuestras sociedades alrededor de mercados financieros supuestamente autorregulados. La tempestad financiera iniciada en 2007 demuestra, entre otras cosas, que tal proyecto de sociedad ha llegad...
This paper provides a new framework for monetary macro-policy, where the Central Bank potentially... more This paper provides a new framework for monetary macro-policy, where the Central Bank potentially intervenes both on short-term and long-term loans markets, and can do this alternatively by manipulating interest rates or money supply. Following Bonnisseau and Orntangar (2010) and Giraud and Tsomokos (2010), we develop a discrete-time out-of-equilibrium dynamics with real trades, performed by myopic heterogeneous households in a cash-in-advance economy with several goods. Positive value and non-neutrality of fiat money are shown to be compatible with a local quantity theory of money. Every monetary policy induces a globally unique trade path, both for real and nominal variables.Thus, monetary policy and myopia suffice to pin down the absolute level of prices. However, a minimal money growth rate is exhibited, which depends upon the level of households' long-term debt and current gains-to-trade. Below this growth rate, the economy falls into a local liquidity trap ; above it, the ...
La panique qui saisit les investisseurs financiers au sujet des dettes publiques europeennes et a... more La panique qui saisit les investisseurs financiers au sujet des dettes publiques europeennes et americaine ne doit pas occulter l’origine fondamentale du krach actuel : le desequilibre des echanges commerciaux et de la fiscalite au sein des pays de l’OCDE. Tentons d’eclairer ces enjeux avant de proposer quelques pistes pour la reconstruction de l’Europe.
La theorie economique dominante decrit un monde organise par l'interet autour du marche ou to... more La theorie economique dominante decrit un monde organise par l'interet autour du marche ou toute relation est un echange. Le refus de cette logique par l'Eglise a ete constant. Formule clairement par Leon XIII dans Rerum Novarum, ce refus a ete confirme par Jean-Paul II. Il tient a ce que le christianisme defend la force du don et que le don est un element essentiel de la vie en general et de la vie economique en particulier. Le don fonde souvent l'emergence de la confiance, et sans confiance, il n'y a pas d'economie possible.
La crise financiere a promu dans les grandes entreprises des attitudes d’ecoute et de soutien qui... more La crise financiere a promu dans les grandes entreprises des attitudes d’ecoute et de soutien qui contrastent avec les postures habituellement prisees. Sommes-nous en train de reapprendre la solidarite sur le terrain de nouvelles formes de precarite et d’exclusion ? Cette question est abordee a partir des exemples du RSA et des societes en reseaux.
This paper studies geometric properties of semi-algebraic economies with (eventually nonconvex) p... more This paper studies geometric properties of semi-algebraic economies with (eventually nonconvex) production - a class which includes linear or Cobb-Douglas preferences, polyhedric production sets and indivisible commodities as well. The main departure with the textbook differentiable viewpoint is that, here, preferences and production sets need not be smooth, even not continuous. Instead, they are semi-algebraic. The obtained results are analogous to those proven in the usual smooth case. Some consequences are also derived for strategic market games.
We investigate properties of correlated equilibria in competitive, pure-exchange market games. We... more We investigate properties of correlated equilibria in competitive, pure-exchange market games. We prove that: 1) the game defined in Schmeidler (1980) always admits the no-trade issue as mixed equilibrium outcome; 2) non-pure correlated equilibria may exist in every competitive strategic market game, and share very "bad" properties (indeterminacy and Pareto-inefficiency), calling for some way to purify them. We then interpret correlated equilibria as strategic sunspots resulting from a strategic incompleteness of markets, due to the fact that players are unable to insure themselves against strategies played by their opponents.
In this paper, I set up the research programme surrounding the limit-price exchange process (see ... more In this paper, I set up the research programme surrounding the limit-price exchange process (see Giraud & Tsomocos (2009)). Having stated my own point of view regarding the failures of classical static general equilibrium theory in capturing dynamical features, I define a continuous-time dynamics for exchange economies with fiat money. Traders have locally ratio-nal expectations, face a cash-in-advance constraint, and continuously adjust their dominant strategy in a short-run monetary strategic market game involv-ing a double-auction with limit-price orders. Money has a positive value along each trade curve, except on the optimal rest-point where it becomes a "veil" while trade vanishes. Typically, there is a piecewise unique (in forward time) trade-and-price curve not only in real, but also in nominal variables. More-over, money is not globally neutral, neither in the short-, nor in the long-run. A localized version of the quantity theory of money induces nevertheless the...
This paper deals with the problem of implementing the Walras correspondence via Nash equilibria, ... more This paper deals with the problem of implementing the Walras correspondence via Nash equilibria, in exchange economies with infinitely many commodities and finitely many households with possibly non-ordered preferences. We explicitly construct a feasible mechanism enjoying some features, which have natural economic meanings. Under a fairly weak boundary condition, this game fully implements the Walras equilibria. If this condition is
This paper provides a framework for monetary macro-policy, where the Central Bank intervenes on s... more This paper provides a framework for monetary macro-policy, where the Central Bank intervenes on short-term loans markets, alternatively by manipulating interest rates or money supply. Trades are subject to a cash-inadvance constraint and to a size restriction. Agents, who are assumed to be myopic, can try to get around the restriction on size by retrading goods in a series of round. They can also borrow cash on the short term loan market. We show that in an appropriately defined strategic market game and under a gainsto-trade hypothesis: 1) trades will lead to a Pareto efficient allocation but only if the number of rounds of trade is infinite; 2) the monetary exchange process is pinned down uniquely in both its real and nominal variables; 3) the money supply should grow sufficiently fast to prevent the trading process to get stuck in a local liquidity trap; 4) if the Central Bank follows the Taylor rule, the trading process is bound to fall into a local liquidity trap.
HAL (Le Centre pour la Communication Scientifique Directe), 2016
This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, e... more This paper examines quantity-targeting monetary policy in a two-period economy with fiat money, endogenously incomplete markets of financial securities, durable goods and production. Short positions in financial assets and long-term loans are backed by collateral, the value of which depends on monetary policy. The decision to default is endogenous and depends on the relative value of the collateral to the loan. We show that Collateral Monetary Equilibria exist and prove a refinement of the Quantity Theory of Money that turns out to be compatible with the long-run non-neutrality of money. Moreover, only three scenarios are compatible with the equilibrium condition: 1) either the economy enters a liquidity trap in the first period; 2) or a credible expansionary monetary policy accompanies the orderly functioning of markets at the cost of running an inflationary risk; 3) else the money injected by the Central Bank increases the leverage of indebted investors, fueling a financial bubble whose bursting leads to debt-deflation in the next period with a non-zero probability. This dilemma of monetary policy highlights the default channel affecting trades and production, and provides a rigorous foundation to Fisher's debt deflation theory as being distinct from Keynes' liquidity trap.
L’accès de tous à des services énergétiques fiables et durables est-il compatible avec la poursui... more L’accès de tous à des services énergétiques fiables et durables est-il compatible avec la poursuite de la croissance du PIB et la lutte contre le réchauffement climatique, ainsi qu’avec les 14 autres Objectifs de développement durable (ODD) ? Cherchant à répondre à cette question, nous sommes conduits à interroger plus globalement la durabilité (au sens, par exemple, de l’empreinte écologique) des Objectifs eux-mêmes et leur compatibilité réciproque. Les droits de l’Homme et le projet démocratique seraient-ils, finalement, la référence – étrangement absente des ODD – susceptible de permettre à la communauté internationale de s’orienter au sein des 17 ODD et de les articuler, une fois consenti le deuil d’une harmonie préétablie qui les concilierait tous d’emblée
El objetivo de esta obra es analizar y defender veinte propuestas, cuya puesta en practica, espec... more El objetivo de esta obra es analizar y defender veinte propuestas, cuya puesta en practica, especialmente en Europa, permita una reforma del capitalismo que la crisis ha vuelto urgente y necesaria. El punto de partida es doble: 1. La vertiente financiera de la crisis, ligada al credito subprime, es ciertamente fundamental, pero no puede ser analizada independientemente de su vertiente economica, asociada con el credito de consumo, la relacion entre accionistas y ejecutivos de empresas, la tributacion de las empresas, etc. 2. La crisis actual no significa el fin del capitalismo liberal como tal, sino la incapacidad de determinado modelo capitalista de asegurar el desarrollo de las sociedades europeas. Se trata de un modelo (de origen anglosajon) que apunta, mediante la desregulacion, a centrar nuestras sociedades alrededor de mercados financieros supuestamente autorregulados. La tempestad financiera iniciada en 2007 demuestra, entre otras cosas, que tal proyecto de sociedad ha llegad...
This paper provides a new framework for monetary macro-policy, where the Central Bank potentially... more This paper provides a new framework for monetary macro-policy, where the Central Bank potentially intervenes both on short-term and long-term loans markets, and can do this alternatively by manipulating interest rates or money supply. Following Bonnisseau and Orntangar (2010) and Giraud and Tsomokos (2010), we develop a discrete-time out-of-equilibrium dynamics with real trades, performed by myopic heterogeneous households in a cash-in-advance economy with several goods. Positive value and non-neutrality of fiat money are shown to be compatible with a local quantity theory of money. Every monetary policy induces a globally unique trade path, both for real and nominal variables.Thus, monetary policy and myopia suffice to pin down the absolute level of prices. However, a minimal money growth rate is exhibited, which depends upon the level of households' long-term debt and current gains-to-trade. Below this growth rate, the economy falls into a local liquidity trap ; above it, the ...
La panique qui saisit les investisseurs financiers au sujet des dettes publiques europeennes et a... more La panique qui saisit les investisseurs financiers au sujet des dettes publiques europeennes et americaine ne doit pas occulter l’origine fondamentale du krach actuel : le desequilibre des echanges commerciaux et de la fiscalite au sein des pays de l’OCDE. Tentons d’eclairer ces enjeux avant de proposer quelques pistes pour la reconstruction de l’Europe.
La theorie economique dominante decrit un monde organise par l'interet autour du marche ou to... more La theorie economique dominante decrit un monde organise par l'interet autour du marche ou toute relation est un echange. Le refus de cette logique par l'Eglise a ete constant. Formule clairement par Leon XIII dans Rerum Novarum, ce refus a ete confirme par Jean-Paul II. Il tient a ce que le christianisme defend la force du don et que le don est un element essentiel de la vie en general et de la vie economique en particulier. Le don fonde souvent l'emergence de la confiance, et sans confiance, il n'y a pas d'economie possible.
La crise financiere a promu dans les grandes entreprises des attitudes d’ecoute et de soutien qui... more La crise financiere a promu dans les grandes entreprises des attitudes d’ecoute et de soutien qui contrastent avec les postures habituellement prisees. Sommes-nous en train de reapprendre la solidarite sur le terrain de nouvelles formes de precarite et d’exclusion ? Cette question est abordee a partir des exemples du RSA et des societes en reseaux.
This paper studies geometric properties of semi-algebraic economies with (eventually nonconvex) p... more This paper studies geometric properties of semi-algebraic economies with (eventually nonconvex) production - a class which includes linear or Cobb-Douglas preferences, polyhedric production sets and indivisible commodities as well. The main departure with the textbook differentiable viewpoint is that, here, preferences and production sets need not be smooth, even not continuous. Instead, they are semi-algebraic. The obtained results are analogous to those proven in the usual smooth case. Some consequences are also derived for strategic market games.
We investigate properties of correlated equilibria in competitive, pure-exchange market games. We... more We investigate properties of correlated equilibria in competitive, pure-exchange market games. We prove that: 1) the game defined in Schmeidler (1980) always admits the no-trade issue as mixed equilibrium outcome; 2) non-pure correlated equilibria may exist in every competitive strategic market game, and share very "bad" properties (indeterminacy and Pareto-inefficiency), calling for some way to purify them. We then interpret correlated equilibria as strategic sunspots resulting from a strategic incompleteness of markets, due to the fact that players are unable to insure themselves against strategies played by their opponents.
In this paper, I set up the research programme surrounding the limit-price exchange process (see ... more In this paper, I set up the research programme surrounding the limit-price exchange process (see Giraud & Tsomocos (2009)). Having stated my own point of view regarding the failures of classical static general equilibrium theory in capturing dynamical features, I define a continuous-time dynamics for exchange economies with fiat money. Traders have locally ratio-nal expectations, face a cash-in-advance constraint, and continuously adjust their dominant strategy in a short-run monetary strategic market game involv-ing a double-auction with limit-price orders. Money has a positive value along each trade curve, except on the optimal rest-point where it becomes a "veil" while trade vanishes. Typically, there is a piecewise unique (in forward time) trade-and-price curve not only in real, but also in nominal variables. More-over, money is not globally neutral, neither in the short-, nor in the long-run. A localized version of the quantity theory of money induces nevertheless the...
This paper deals with the problem of implementing the Walras correspondence via Nash equilibria, ... more This paper deals with the problem of implementing the Walras correspondence via Nash equilibria, in exchange economies with infinitely many commodities and finitely many households with possibly non-ordered preferences. We explicitly construct a feasible mechanism enjoying some features, which have natural economic meanings. Under a fairly weak boundary condition, this game fully implements the Walras equilibria. If this condition is
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Papers by Gaël Giraud