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A Dynamic Approach to Money Supply

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Listed:
  • Yougui Wang
  • Guobin Zhou
  • Wanting Xiong

Abstract

In this paper, we present the mechanism of money supply from a dynamic perspective, in which the behaviors of the sectors involved in the process of money creation and the interplay among them are taken into account. Specially, we introduce households’ withdrawals of deposit and firms’ repayments to loan, which are ignored in the conventional statement of money creation process. By deriving and analyzing the equilibrium solution to the dynamic equations which characterize the process, we can discuss the corresponding influence of each sector on the money supply.

Suggested Citation

  • Yougui Wang & Guobin Zhou & Wanting Xiong, 2013. "A Dynamic Approach to Money Supply," International Journal of Sciences, Office ijSciences, vol. 2(07), pages 47-53, July.
    • Handle: RePEc:adm:journl:v:2:y:2013:i:7:p:47-53
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    References listed on IDEAS

    as
    1. Phillip Cagan, 1958. "The Demand for Currency Relative to the Total Money Supply," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 303-303.
    2. Michele Berardi, 2007. "Beyond the Static Money Multiplier: In Search of a Dynamic Theory of Money," Lecture Notes in Economics and Mathematical Systems, in: Andrea Consiglio (ed.), Artificial Markets Modeling, chapter 1, pages 3-16, Springer.
    3. Joachim Ahrensdorf & S. Kanesathasan, 1960. "Variations in the Money Multiplier and Their Implications for Central Banking," IMF Staff Papers, Palgrave Macmillan, vol. 8(1), pages 126-149, November.
    4. Andrea Consiglio (ed.), 2007. "Artificial Markets Modeling," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-73135-1, December.
    5. Ping He & Lixin Huang & Randall Wright, 2005. "Money And Banking In Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 637-670, May.
    6. Karl Brunner & Allan H. Meltzer, 1964. "Some Further Investigations Of Demand And Supply Functions For Money," Journal of Finance, American Finance Association, vol. 19(2), pages 240-283, May.
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