Martin Shubik

Martin Shubik is currently the Seymour H. Knox Professor of Mathematical Institutional Economics at Yale University. The title indicates an interest in the underlying abstrac-tions of mathematical economics combined with a stress on understanding actual institutions and processes. He received his BA and MS degrees in Mathematics and Political Economy from the University of Toronto, Ontario, Canada in 1947 and 1949 respectively. He received his AM and PhD degrees in Economics from Princeton University in 1951 and 1953 respectively. His main academic concerns are with the theory of money and financial institutions (how and why they are created and destroyed—and their social purpose), the theory of games and its relation-ship to strategic behavior, and a third and somewhat different interest is in the management and economics of cultural institutions. He is the author of approximately twenty books and over 200 articles and specialises primarily in strategic analysis.

Papers Published in World Economics:

On Understanding Money
Author: Martin Shubik

Fiat money is a creation of both the state and society. Its value is supported by expectations which are conditioned by the dynamics of trust in government, the socio-economic structure and by outside events such as wars, plagues or political unrest. The micro-management of a dynamic economy is not far removed in difficulty from the micro-management of the weather. However, money and the financial institutions and instruments of a modern economy provide the means to influence expectations and bound behaviour. The control of the fiat money supply, together with rules on the granting of credit and the bankruptcy, default and reorganisation rules are public services. They provide lower and upper bounds for the price level in the economy. They also determine the innovation rate of the economy. An innovation may be regarded as an economic mutation; the less costly failure is, the more likely an innovation will be risked.

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