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Effects of taxation on money distribution

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  • Diniz, M.
  • Mendes, F.M.

Abstract

The study of how money is distributed among a great number of agents has called the attention of econophysics researchers since the late 1990s. Following the setup proposed by Dragulescu and Yakovenko (2000) to simulate a dynamic economy, we investigate how the money distribution is affected by a government that collects taxes and gives this amount back to the agents periodically. We propose different taxation schemes and compare them using the Gini coefficient associated to the stationary money distribution.

Suggested Citation

  • Diniz, M. & Mendes, F.M., 2012. "Effects of taxation on money distribution," International Review of Financial Analysis, Elsevier, vol. 23(C), pages 81-85.
    • Handle: RePEc:eee:finana:v:23:y:2012:i:c:p:81-85
    DOI: 10.1016/j.irfa.2011.06.014
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    References listed on IDEAS

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    1. Arnab Chatterjee & Bikas K Chakrabarti, 2005. "Ideal-Gas Like Markets: Effect of Savings," Papers physics/0507136, arXiv.org, revised Jul 2005.
    2. Adrian Dragulescu & Victor M. Yakovenko, 2000. "Statistical mechanics of money," Papers cond-mat/0001432, arXiv.org, revised Aug 2000.
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    9. Sokolov, Andrey & Melatos, Andrew & Kieu, Tien, 2010. "Laplace transform analysis of a multiplicative asset transfer model," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(14), pages 2782-2792.
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    Cited by:

    1. Cockshott, Paul & Zachariah, David, 2014. "Conservation laws, financial entropy and the Eurozone crisis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-55.

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    Keywords

    Money distribution; Statistical physics;

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