Statistical mechanics of money: how saving propensity affects its distribution
TLDR
In this article, the authors consider a simple model of a closed economic system where the total money is conserved and the number of economic agents is fixed and investigate the effect of the saving propensity of the agents on the stationary or equilibrium probability distribution of money.Abstract:
We consider a simple model of a closed economic system where the total money is conserved and the number of economic agents is fixed. Analogous to statistical systems in equilibrium, money and the average money per economic agent are equivalent to energy and temperature, respectively. We investigate the effect of the saving propensity of the agents on the stationary or equilibrium probability distribution of money. When the agents do not save, the equilibrium money distribution becomes the usual Gibb's distribution, characteristic of non-interacting agents. However with saving, even for individual self-interest, the dynamics becomes cooperative and the resulting asymmetric Gaussian-like stationary distribution acquires global ordering properties. Intriguing singularities are observed in the stationary money distribution in the market, as functions of the marginal saving propensity of the agents.read more
Citations
More filters
Journal ArticleDOI
Colloquium: Statistical mechanics of money, wealth, and income
TL;DR: In this article, the authors reviewed statistical models for money, wealth, and income distributions developed in the econophysics literature since the late 1990s and showed that the probability distribution of money is exponential for certain classes of models with interacting economic agents.
Journal ArticleDOI
Agent-based models of financial markets
TL;DR: Several microscopic (agent-based) models of financial markets which have been studied by economists and physicists over the last decade: Kim-Markowitz, Levy-Levy-Solomon, Cont-Bouchaud, Solomon-Weisbuch, Lux-Marchesi, Donangelo- Sneppen and Solomon-Lenz-Huang as mentioned in this paper.
Journal ArticleDOI
Pareto law in a kinetic model of market with random saving propensity
TL;DR: In this article, the authors have numerically simulated the ideal-gas models of trading markets, where each agent is identified with a gas molecule and each trading as an elastic or money-conserving two-body collision.
Journal ArticleDOI
On a Kinetic Model for a Simple Market Economy
TL;DR: In this article, a simple kinetic model of economy involving both exchanges between agents and speculative trading is considered and a suitable asymptotic limit of the model yielding a Fokker-Planck equation for the distribution of wealth among individuals.
Journal ArticleDOI
Econophysics review: II. Agent-based models
TL;DR: A review of recent empirical and theoretical developments usually grouped under the heading of Econophysics can be found in this paper, where the authors reviewed the statistical properties of financial time series, the statistics exhibited in order books and discussed some studies of correlations of asset prices and returns.
References
More filters
Journal ArticleDOI
The General Theory of Employment
TL;DR: In this paper, the theory of interest was restated and the output of capital goods and of consumption was analyzed in terms of uncertainty and fluctuations of investment, and demand and supply for output as a whole.
Book
The economy as an evolving complex system II
TL;DR: A.B. Lane and R.F. Tesfatsion as mentioned in this paper discussed the evolution of trading structures in an Artificial Stock Market and discussed the role of game-theoretic models in economic history.
Posted Content
The General Theory of Employment
TL;DR: In this paper, the theory of interest was restated and the output of capital goods and of consumption was analyzed in terms of uncertainty and fluctuations of investment, and demand and supply for output as a whole.
Book
Equilibrium statistical physics
TL;DR: In this article, the authors present a review of Thermodynamics Statistical Ensembles Mean Field and Landau Theory Dense Gases and Liquids Critical Phenomena I critical phenomena II: The Renormalization Group Simulations Polymers and Membranes Quantum Fluids Linear Response Theory Disordered Materials