A Thermodynamic Approach to Monetary Economics. A Revision. An application to the UK Economy 1969-2006 and the USA Economy 1966-2006
This paper develops further monetary aspects of a model, first set out as part of a paper by the author published in 2007, concerning the application of thermodynamic principles to economics. The model is backed up by statistical analysis of quarterly data of the UK and USA economies. The model sets out relationships between price, output volume, velocity of circulation and money supply, and develops an equation to measure entropy gain in an economic system, linked to interest rates. This paper was first released in August 2008, but has now been revised to reflect current thinking
References listed on IDEAS
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- Sousa, Tânia & Domingos, Tiago, 2006. "Equilibrium econophysics: A unified formalism for neoclassical economics and equilibrium thermodynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 371(2), pages 492-512.
- Samuelson, Paul A, 1972.
"Maximum Principles in Analytical Economics,"
American Economic Review,
American Economic Association, vol. 62(3), pages 249-262, June.
- Sousa, Tania & Domingos, Tiago, 2006. "Is neoclassical microeconomics formally valid? An approach based on an analogy with equilibrium thermodynamics," Ecological Economics, Elsevier, vol. 58(1), pages 160-169, June.
- John Bryant, 2007. "A Thermodynamic Theory of Economics," Working Papers tefprv2007, Economic Consultancy, Vocat International.
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