John Duffy, professor of economics and co-director of the Experimental Social Sciences Laboratory, has received a $79,000 grant from the National Science Foundation to study the impact of different monetary policies on economic activity and inflation. The study relies on a model of economic interactions that he’ll run over the computer network in the ESSL, using UCI undergrads as subjects. They’ll randomly alternate between being producers or consumers. The latter must have money to buy goods and services from the producers, and the producers accept money for what they sell because they could be consumers in the next round and need money to buy things themselves. It’s a model of decentralized monetary exchange, Duffy explained, and in the background, he’s manipulating the growth rate of the money supply to gauge the effect of such changes on prices and the volume of economic exchange. The study will run through July 2017.
With NSF funding, UCI economist conducts lab experiments on outcomes of monetary policies