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The Cities: Reactors Of Economic Transactions


  • Purica, Ionut

    () (Institute of Economic Forecasting)


The distribution of persons in each economy by their incomes is similar to the Maxwell-Boltzmann equilibrium distribution encountered in various physical systems. The transactions the persons are making to buy things that make them survive (in all sort of ways) are making them ‘poorer’, as they diminish the amount of money they have. The ‘work and get paid’ type of transactions are rebuilding the financial capacity of the persons. Describing this process as a diffusion equation, in a cylindrical geometry, results in a Bessel function J0(r) solution which matches the density distribution of persons in Paris (as a typical circular pattern city). The analysis of the decrease in income shows a saving/spending behavior function which saturates around 15% - 20% of the total income. This is a possible explanation of the frequent savings value of 15%-22% of GDP found in various economies. Moreover, a simple equation for the dynamic behavior of a city, on which a 365 days period is imposed, results in one week as the time after which persons have to be paid to restart transactions. The transaction cross section s is shown to have a “1/income” behavior, being a measure of the capability to make transactions, proportional to the probability of enterprises to have an income greater than a given value – this behavior has recently been shown to happen in various economies and it is known as the Zipf’s law. Using neutron physics methods in describing the economic transactions environment opens an alternative view on the forecasting models of an economic system’s behavior, and shows that the geographical dimension of a city is determined by the economic transaction behavior/environment in that city.

Suggested Citation

  • Purica, Ionut, 2004. "The Cities: Reactors Of Economic Transactions," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 1(2), pages 20-37, May.
  • Handle: RePEc:rjr:romjef:v:1:y:2004:i:2:p:20-37

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    1. repec:voc:wpaper:tech22012 is not listed on IDEAS
    2. repec:voc:wpaper:tech82012 is not listed on IDEAS
    3. repec:voc:wpaper:tech52012 is not listed on IDEAS
    4. Purica, Ionut, 2012. "Control and Crisis in a City Seen as a Reactor of Economic Transactions," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 116-127, March.
    5. repec:voc:wpaper:tech62012 is not listed on IDEAS
    6. repec:voc:wpaper:tech12012 is not listed on IDEAS
    7. repec:voc:wpaper:tech72012 is not listed on IDEAS
    8. repec:voc:wpaper:tech32012 is not listed on IDEAS
    9. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2010. "Statistical theories of income and wealth distribution," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-31.
    10. repec:voc:wpaper:tech92012 is not listed on IDEAS
    11. repec:voc:wpaper:tech42012 is not listed on IDEAS

    More about this item


    economic transactions; income distribution; Maxwell-Boltzmann equilibrium distribution; urban economics;

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)


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