Experimental Economics and Game Theory Seminar for March 23

Events, Seminars | March 20, 2018

Join us for the next ICES Seminar in Experimental Economics and Game Theory of the semester, featuring Daniela Puzzello.

Prof. Puzzello, of the University of Indiana, Bloomington, will discuss her paper Monetary Policies in the Laboratory: Experimental Evidence (Abstract). The talk will take place on Friday, March 23rd, from 4:00 to 5:00pm in room 5183 of Vernon Smith Hall (formerly Metropolitan Building), Arlington campus.

Visit the Seminar schedule to access the paper and to learn more about upcoming speakers.


In this paper we explore deflationary and inflationary monetary policies. Specifically, we study the celebrated Friedman rule monetary policy in the context of a laboratory economy based on the micro-founded model of money proposed by Lagos and Wright (2005). The rule that Friedman proposed can be shown to be optimal in a very wide variety of different monetary models, including the Lagos-Wright model. We explore two implementations of the Friedman rule. The first implementation is based on a deflationary monetary policy where money supply contracts to offset time discounting. In the second implementation, we consider the payment of interest on money removing the private marginal cost from holding money. Overall, we do not find support for the hypothesis that quantities traded and welfare are higher under the Friedman rule. We also find that quantities traded are higher in the presence of inflation, contrary to the theoretical predictions.

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