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The Dynamics of Money

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  • Per Bak
  • Simon F. Norrelykke
  • Martin Shubik

Abstract

We present a dynamical many-body theory of money in which the value of money is a time dependent ``strategic variable'' that is chosen by the individual agents. The value of money in equilibrium is not fixed by the equations, and thus represents a continuous symmetry. The dynamics breaks this continuous symmetry by fixating the value of money at a level which depends on initial conditions. The fluctuations around the equilibrium, for instance in the presence of noise, are governed by the ``Goldstone modes'' associated with the broken symmetry. The idea is illustrated by a simple network model of monopolistic vendors and buyers.

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File URL: http://arxiv.org/pdf/cond-mat/9811094
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Bibliographic Info

Paper provided by arXiv.org in its series Papers with number cond-mat/9811094.

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Date of creation: Nov 1998
Date of revision: May 1999
Publication status: Published in Phys. Rev. E 60, 2528-2532 (1999)
Handle: RePEc:arx:papers:cond-mat/9811094

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Web page: http://arxiv.org/

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Cited by:
  1. Juergen Huber & Martin Shubik & Shyam Sunder, 2009. "Default Penalty as a Disciplinary and Selection Mechanism in Presence of Multiple Equilibria," Cowles Foundation Discussion Papers 1730, Cowles Foundation for Research in Economics, Yale University.
  2. Chen-Zhong Qin & Lloyd S. Shapley & Martin Shubik, 2009. "Marshallian Money, Welfare, and Side-Payments," Cowles Foundation Discussion Papers 1729, Cowles Foundation for Research in Economics, Yale University.
  3. McCauley, Joseph l., 2004. "Thermodynamic analogies in economics and finance: instability of markets," MPRA Paper 2159, University Library of Munich, Germany.
  4. Newby, Michael & Behr, Adam & Feizabadi, Mitra Shojania, 2011. "Investigating the distribution of personal income obtained from the recent U.S. data," Economic Modelling, Elsevier, vol. 28(3), pages 1170-1173, May.
  5. McCauley, Joseph L., 2004. "Making dynamic modelling effective in economics," MPRA Paper 2130, University Library of Munich, Germany.

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