This program sets up a closed economy with markets for labor
and goods. Participants are either workers or firms, who are endowed with
fiat money. Firms begin by posting
wages and maximum hire quantities simultaneously (subject to cash-in-advance
constraints), and workers each choose which firm
to visit. Jobs are allocated randomly if there is excess supply at a firm, and
hired workers are paid the posted wage. Then firms post prices and maximum sales
quantities (subject to production-in-advance constraints), and workers (who are also consumers) decide
which firm to visit, with excess demand for each firm being allocated randomly.
Frictions are induced by the "in advance" constraints and the
one-visit-per-period rule. The instructor can inject money to shock the system.
Vecon Lab - April 16, 2025 |