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Graphic explanation for welfare economic foundation of hoarding loss

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  • Miura, Shinji

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 objective truth.

Suggested Citation

  • Miura, Shinji, 2015. "Graphic explanation for welfare economic foundation of hoarding loss," MPRA Paper 68551, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:68551
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    References listed on IDEAS

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    1. Gerrit Meijer & Richard F.A. Vogel, 2000. "The fate of new ideas: Hermann Heinrich Gossen, his life, work and influence," Journal of Economic Studies, Emerald Group Publishing, vol. 27(4/5), pages 416-420, September.
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    5. Shinji MIURA, 2016. "Unified Money Circulation Equation and an Analogical Explanation for Its Solvability," Journal of Economics Bibliography, KSP Journals, vol. 3(1), pages 28-37, March.
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    7. Yukihiro Ikeda, 2000. "Hermann Heinrich Gossen: a Wirkungsgeschichte of an ignored mathematical economist," Journal of Economic Studies, Emerald Group Publishing, vol. 27(4/5), pages 394-415, September.
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    More about this item

    Keywords

    Money Circulation; Welfare Economics; Under-Consumption; Paradox of Thrift; Intertemporal Choice;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • 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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