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An elementary model of money circulation

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  • Pokrovskii, Vladimir N.
  • Schinckus, Christophe

Abstract

This paper investigates money circulation for a system, consisting of a production system, the government, a central bank, commercial banks and many customers of the commercial banks. A set of equations for the system is written; the theory determines the main features of interaction between production and money circulation. Investigation of the equations in a steady-state situation reveals some relationship among output of the production system and monetary variables. The relation of quantity theory of money is confirmed, whereas a new concept of the efficiency of the system is introduced.

Suggested Citation

  • Pokrovskii, Vladimir N. & Schinckus, Christophe, 2016. "An elementary model of money circulation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 111-122.
    • Handle: RePEc:eee:phsmap:v:463:y:2016:i:c:p:111-122
    DOI: 10.1016/j.physa.2016.07.006
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    References listed on IDEAS

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    1. Gennaro Zezza, 2004. "Some Simple, Consistent Models of the Monetary Circuit," Macroeconomics 0405006, University Library of Munich, Germany.
    2. Werner, Richard A., 2014. "Can banks individually create money out of nothing? — The theories and the empirical evidence," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 1-19.
    3. Louis-Philippe Rochon, 2005. "The Existence of Monetary Profits within the Monetary Circuit," Palgrave Macmillan Books, in: Giuseppe Fontana & Riccardo Realfonzo (ed.), The Monetary Theory of Production, chapter 8, pages 125-138, Palgrave Macmillan.
    4. Steve Keen, 2009. "The Dynamics of the Monetary Circuit," Palgrave Macmillan Books, in: Jean-François Ponsot & Sergio Rossi (ed.), The Political Economy of Monetary Circuits, chapter 9, pages 161-187, Palgrave Macmillan.
    5. Steve Keen, 2008. "Keynes’s ‘Revolving Fund of Finance’ and Transactions in the Circuit," Chapters, in: L. Randall Wray & Matthew Forstater (ed.), Keynes and Macroeconomics After 70 Years, chapter 17, Edward Elgar Publishing.
    6. L. Randall Wray & Matthew Forstater (ed.), 2008. "Keynes and Macroeconomics After 70 Years," Books, Edward Elgar Publishing, number 12915.
    7. repec:cup:cbooks:9781107013445 is not listed on IDEAS
    8. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    9. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
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    1. Schinckus, Christophe & Altukhov, Yurii A. & Pokrovskii, Vladimir N., 2018. "Empirical justification of the elementary model of money circulation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 493(C), pages 228-238.

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