Lawrence S. Ritter

Optimal Municipal Cash Management: A Case Study

Less extreme cases, however, are even more worrisome, primarily because the distortions in the solutions are less easy to identify. As shown above, (Nim)1 and (N1m) 2 without distortions differ in this illustration by 20 per cent of their mean value. WYhile it is easy to flag this difference for a steady series like labor force, there are many series, e.g., inventory investment, for which a 20 per cent jump is nothing to cause surprise. Further, if the relevant

On the Fundamental Role of Transactions Costs in Monetary Theory: Two Illustrations from Casino Gambling: A Note

Recent renewed interest in the microfoundations of money has focused on the significance of transactions costs as the basic reason for the emergence of money in place of barter (see [1, 2; 3, Introduction; 4]). Many aspects of the role of money in facilitating exchange, particularly with respect to transactions costs, are illustrated in microcosm in casino gambling, where the normal medium of exchange is temporarily replaced by a specialized form of money, casino-issued chips. Within the confines of a casino, its chips are convertible on demand into the normal means of payment at a fixed rate of exchange. The use of chips in place of normal money presumably yields benefits sufficient to outweigh the costs-such as the costs involved in frequent exchanges of normal money for chips and vice versa, as well as those incurred in producing chips when a plentiful supply of legal tender is readily available. What those benefits are, relative to costs, should reflect some of the microfoundations of money in society at large. The analysis below pertains to practices and policies at casinos in Las Vegas, Nevada. In casinos elsewhere the general principles are similar but details frequently differ. Furthermore, although there are various forms of casino gambling, this paper considers only two, roulette and dice (also known as craps), both of which typically utilize casino-issued chips as the medium of exchange.

Towards a Reconstruction of Macroeconomics.

Recent failures of monetary and fiscal policy reflect deficiencies in prevailing theories of demand management. Taking available data into account, this book discusses the merits and shortcomings of Keynesian and monetarist approaches and develops the lines along which our theories need to be reconstructed.