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Empirical justification of the elementary model of money circulation

Author

Listed:
  • Schinckus, Christophe
  • Altukhov, Yurii A.
  • Pokrovskii, Vladimir N.

Abstract

This paper proposes an elementary model describing the money circulation for a system, composed by a production system, the government, a central bank, commercial banks and their customers. A set of equations for the system determines the main features of interaction between the production and the money circulation. It is shown, that the money system can evolve independently of the evolution of production. The model can be applied to any national economy but we will illustrate our claim in the context of the Russian monetary system.

Suggested Citation

  • Schinckus, Christophe & Altukhov, Yurii A. & Pokrovskii, Vladimir N., 2018. "Empirical justification of the elementary model of money circulation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 493(C), pages 228-238.
    • Handle: RePEc:eee:phsmap:v:493:y:2018:i:c:p:228-238
    DOI: 10.1016/j.physa.2017.10.054
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    References listed on IDEAS

    as
    1. Yougui Wang & Ning Ding & Li Zhang, 2005. "The Circulation of Money and Holding Time Distribution," Papers physics/0507147, arXiv.org.
    2. Wang, Yougui & Ding, Ning & Zhang, Li, 2003. "The circulation of money and holding time distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(3), pages 665-677.
    3. Werner, Richard A., 2014. "Can banks individually create money out of nothing? — The theories and the empirical evidence," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 1-19.
    4. Steve Keen, 2014. "Endogenous money and effective demand," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(3), pages 271-291, July.
    5. Steve Keen, 2008. "Keynes’s ‘Revolving Fund of Finance’ and Transactions in the Circuit," Chapters, in: L. Randall Wray & Matthew Forstater (ed.), Keynes and Macroeconomics After 70 Years, chapter 17, Edward Elgar Publishing.
    6. Pokrovskii, Vladimir N. & Schinckus, Christophe, 2016. "An elementary model of money circulation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 463(C), pages 111-122.
    7. Victor M. Yakovenko, 2016. "Monetary economics from econophysics perspective," Papers 1608.04832, arXiv.org.
    8. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    9. Victor M. Yakovenko & J. Barkley Rosser, 2009. "Colloquium: Statistical mechanics of money, wealth, and income," Papers 0905.1518, arXiv.org, revised Dec 2009.
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    Cited by:

    1. Chen, Xiaohong & Wohlfarth, Paul & Smith, Ron P., 2021. "China's money demand in a cointegrating vector error correction model," Journal of Asian Economics, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    Bank system; Efficiency of bank system; Money circulation; Money system of Russia; Endogenous money;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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