Theory of Money and Financial Institutions

This is the second volume in a three-volume exposition of Martin Shubik's vision of"mathematical institutional economics"--a term he coined in 1959 to describe the theoreticalunderpinnings needed for the construction of an economic dynamics. The goal is to develop aprocess-oriented theory of money and financial institutions that reconciles micro- andmacroeconomics, using as a prime tool the theory of games in strategic and extensive form. Theapproach involves a search for minimal financial institutions that appear as a logical,technological, and institutional necessity, as part of the "rules of the game." Money and financialinstitutions are assumed to be the basic elements of the network that transmits the sociopoliticalimperatives to the economy.Volume 1 deals with a one-period approach to economic exchange withmoney, debt, and bankruptcy. Volume 2 explores the new economic features that arise when we considermulti-period finite and infinite horizon economies. Volume 3 will consider the specific role offinancial institutions and government, and formulate the economic financial control problem linkingmicro- and macroeconomics.

Martin Shubik is Seymour Knox Professor of Mathematical Institutional Economics (Emeritus) at Yale University's Cowles Foundation and School of Management. He is the author of hundreds of scholarly articles and many books, including Game Theory in the Social Sciences, volumes 1 and 2 (MIT Press, 1982 and 1984) and the previous two volumes of The Theory of Money and Financial Institutions (MIT Press, 1999).