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Graphic Explanation for Welfare Economic Foundation of Hoarding Loss

Author

Listed:
  • Shinji MIURA

    (Gifu, Japan.)

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 reflux despite of its objective truthfulness.

Suggested Citation

  • Shinji MIURA, 2016. "Graphic Explanation for Welfare Economic Foundation of Hoarding Loss," Journal of Economics Bibliography, EconSciences Journals, vol. 3(2), pages 265-289, June.
    • Handle: RePEc:cvv:journ6:v:3:y:2016:i:2:p:265-289
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    Keywords

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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • 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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