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Statistical mechanics of money

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  • Adrian Dragulescu
  • Victor M. Yakovenko

Abstract

In a closed economic system, money is conserved. Thus, by analogy with energy, the equilibrium probability distribution of money must follow the exponential Gibbs law characterized by an effective temperature equal to the average amount of money per economic agent. We demonstrate how the Gibbs distribution emerges in computer simulations of economic models. Then we consider a thermal machine, in which the difference of temperatures allows one to extract a monetary profit. We also discuss the role of debt, and models with broken time-reversal symmetry for which the Gibbs law does not hold.

Suggested Citation

  • Adrian Dragulescu & Victor M. Yakovenko, 2000. "Statistical mechanics of money," Papers cond-mat/0001432, arXiv.org, revised Aug 2000.
    • Handle: RePEc:arx:papers:cond-mat/0001432
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    File URL: http://arxiv.org/pdf/cond-mat/0001432
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