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Graphic explanation for welfare economic foundation of hoarding loss

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  • Miura, Shinji

Abstract

Saving brings an economic loss. The author intends to publish a paper, which gives a foundation of this paradox of thrift by connecting money circulation analysis and welfare economics in the case where saving is limited to hoarding. As an introduction of the intended paper, this paper provides a simple explanation for hoarding loss using some graphs. Under certain conditions, the representative agent hoards money in order to increase utility, but the hoarding actually decreases it against agent’s rational intention. This irrationality of rationality occurs because the agent maximizes their utility while lowering the budget of the entire relevant term. This conclusion is derived from the agent making the decision with an ignorance of the whole expenditure reflux. Since the interest of a selfish agent is limited to their private range, the agent ignores the objective truth.

Suggested Citation

  • Miura, Shinji, 2015. "Graphic explanation for welfare economic foundation of hoarding loss," MPRA Paper 68551, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68551
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    Cited by:

    1. Miura, Shinji, 2018. "Welfare economic foundation of hoarding loss by money circulation optimization," MPRA Paper 88443, University Library of Munich, Germany.

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    More about this item

    Keywords

    Money Circulation; Welfare Economics; Under-Consumption; Paradox of Thrift; Intertemporal Choice;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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