New Palgrave Dictionary of Money and Finance
© Macmillan, 1992
Publication type: Chapter
Research Archive Topic: Corporate Finance
Writing for the New Palgrave Dictionary of Money and Finance, Stephen Zeldes and Stephen O?Connell trace the history of the term "Ponzi Games" and define it as "a situation in which a borrower rolls over debt perpetually, covering all interest and/or principal repayments with additional borrowing. " They illustrate why a perpetual flow of new lenders is necessary to a Ponzi game, and discuss the link between Ponzi games and phenomena such as valued fiat money, asset price bubbles, and dynamic efficiency.
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