Berardi, Michele (2007): Beyond the static money multiplier: in search of a dynamic theory of money. Published in: Artificial Markets Modeling , Vol. 599, (2007)
Download (150kB) | Preview
In this paper, we analyze the process of money creation in a credit economy. We start from the consideration that the traditional money multiplier is a poor description of this process and present an alternative and dynamic approach that takes into account the heterogeneity of agents in the economy and their interactions. We show that this heterogeneity can account for the instability of the multiplier and that it can make the system path-dependent. By using concepts and techniques borrowed from network theory and statistical mechanics, we then try to shed some light on the actual process by which money is endogenously created in an economy.
|Item Type:||MPRA Paper|
|Original Title:||Beyond the static money multiplier: in search of a dynamic theory of money|
|Keywords:||Money; Money multiplier; Network theory; Statistical mechanics.|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply; Credit; Money Multipliers
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E41 - Demand for Money
|Depositing User:||Michele Berardi|
|Date Deposited:||13. Dec 2009 21:41|
|Last Modified:||12. Feb 2013 18:09|
 Albert R, Barabasi A-L (2002) Statistical mechanics of complex networks. Review of Modern Physics,74.
 Bak P, Tang C, Wiesenfeld K (1987) Self-organized criticality: an explanation of 1 / f noise. Physical Review Letters 59: 381�384.
 Chakraborti A, Chakrabarti BK (2000) Statistical mechanics of money: how saving propensity affects its distribution. The European Physical Journal B 17.
 Dragulescu AA, Yakovenko VM (2003) Statistical mechanics of money, income, and wealth: a short survey. Modelling of Complex Systems: Seventh Granada Lectures, AIP Conference Proceedings 661: 180-183.
 Dragulescu AA, Yakovenko VM (2000) Statistical mechanics of money. The European Physical Journal B 17.
 Goh K-I, Lee D-S, Kahng B, Kim D (2003) Sandpile on scale-free networks. Physical Review Letters 91.
 Goodhart CAE (1984) Monetary theory and practice. Macmillan, London.
 Howells P (2005) The endogeneity of money: empirical evidence. University of theWest of England, School of Economics Discussion Papers Series 0513.
 Kydland FE, Prescott EC (1990) Business cycles: real facts and a monetary myth. Quarterly Review, Federal Reserve Bank of Minneapolis, Spring Issue.
 Moore BJ (1988) Horizontalists and verticalists: the macroeconomics of credit money. Cambridge University Press, New York.
 Turcotte DL (1999) Self-organized criticality. Reports on Progress in Physics 62.
 Watts DJ, Strogatz SH (1998) Collective dynamics of 'small world' networks. Nature 393: 440-442.