Introduction

This introduction presents an overview of the key concepts covered in the subsequent chapters of this book. The book discusses some basic definitions and assumptions for a monetary economy with spot markets. It formulates an (infinite dimensional) space of money economies in which an element is a list of expectations, direct utility functions, money and commodity endowments. The book also introduces the topological concept of "almost all" economies in the space of money economies. As a matter of fact, the basic simplified temporary equilibrium model can be easily extended to incorporate other aspects of economic activity which do not occur in an Arrow-Debreu economy. The basic idea of the short-run or temporary equilibrium model is that each agent's decisions are made sequentially and may be revised as time progresses according to the information conveyed about the future environment, which is based upon the agent's current and past observations.