Gold, liquidity and secured loans in a multistage economy. I: Gold as money (Q1118513)

The existence of active low information non-cooperative equilibria in a multistage finite and infinite horizon strategic market game is established where gold is utilized as money. Conditions for the existence of a stationary state are noted. By considering a payments time lag a natural way to define liquidity is introduced. In general if there is any non-symmetry in the lag in payments there is no close relationship between the non-cooperative equilibria (NE's) and the competitive equilibria (CE's) of the related exchange economy. The meaning of a fully secured loan is specified and the strategic market game with secured loans and an endogenous rate of interest is considered.