Complexity Measures and Macroeconomic Stability of Centralized and Decentralized Exchange: Evidence from Cross-Cultural Anthropological Data
Centralized exchange has a worst-case size-complexity many orders of magnitude lower than decentralized monetary exchange. As long as its computational limits are not exceeded, therefore, a centralized exchange may approach Pareto-efficiency more rapidly than a decentralized exchange. Wealth holdings sufficient to guarantee Pareto-efficient exchange may also be more easily achieved by a centralized exchange. In a centralized exchange, the sufficiency condition is that the central agent should begin each period with wealth equal to all other agentsâ€™ excess demands. In a decentralized monetary system, by contrast, each agent should begin each period with wealth equal to its own excess demand. If centralized wealth sufficiency is more reliably maintained, then it may have â€“ in addition to its size-complexity advantage â€“ greater macroeconomic stability than decentralized monetary exchange. Supporting this conjecture, historical evidence and tests on cross-cultural anthropological data suggest that the first economies with a complex division of labor were centralized â€œstorehouse economies,â€ rather than the decentralized monetary systems. Econometric estimates are used to demonstrate a further implication of size-complexity theory: that the historic limits of centralized systems, and the eventual prevalence of decentralized monetary exchange, were associated with increased division of labor, rather than increased population
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:sce:scecf5:65. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.