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Using systems engineering software to build a model of the monetary circuit

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Author Info
Steve Keen

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Abstract

The Circuitists are a largely European school of economic thought that argue that a monetary economy is fundamentally different to a barter system, and that therefore money cannot be simply modelled as the n+1th good in a Walrasian general equilibrium system. However, while the School has made major contributions to the theory of endogenous money, it has not yet succeeded in constructing a model of the monetary circuit, which is its alternative to general equilibrium modelling. Starting from the first principles by which the School derives its powerful insights into a monetary economy, I construct a simple closed dynamic model of the circuit using systems engineering software (Mathcad). The model's behavior contradicts several propositions previously derived by Circuitists using either equilibrium conditions or unclosed dynamic models

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Publisher Info
Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2004 with number 78.

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Date of creation: 11 Aug 2004
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Handle: RePEc:sce:scecf4:78

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Related research
Keywords: Non-neoclassical economics; Post Keynesian economics; Dynamics; Systems Engineering;

Find related papers by JEL classification:
B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional
C59 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Other
C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian

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