In this paper the dependence of wealth distribution and the velocity of money on the required reserve ratio is examined based on a random transfer model of money and computer simulations. A fractional reserve banking system is introduced to the model where money creation can be achieved by bank loans and the monetary aggregate is determined by the monetary base and the required reserve ratio. It is shown that monetary wealth follows asymmetric Laplace distribution and latency time of money follows exponential distribution. The expression of monetary wealth distribution and that of the velocity of money in terms of the required reserve ratio are presented in a good agreement with simulation results.
The effects of saving and spending patterns on holding time distribution of money are investigated based on the ideal gas-like models. We show the steady-state distribution obeys an exponential law when the saving factor is set uniformly, and a power law when the saving factor is set diversely. The power distribution can also be obtained by proposing a new model where the preferential spending behavior is considered. The association of the distribution with the probability of money to be exchanged has also been discussed. PACS. 89.65.Gh Economics; econophysics, financial markets, business and management -87.23.Ge Dynamics of social systems -05.10.-a Computational methods in statistical physics and nonlinear dynamics -02.50.-r Probability theory, stochastic processes, and statistics Send offprint requests to: Yougui Wang a
We introduce preferential behavior into the study on statistical mechanics of money circulation. The computer simulation results show that the preferential behavior can lead to power laws on distributions over both holding time and amount of money held by agents. However, some constraints are needed in generation mechanism to ensure the robustness of power-law distributions.
The global economy is a complex dynamical system, whose cyclical fluctuations can mainly be characterized by simultaneous recessions or expansions of major economies. Thus, the researches on the synchronization phenomenon are key to understanding and controlling the dynamics of the global economy. Based on a pairwise maximum entropy model, we analyze the business cycle synchronization of the G7 economic system. We obtain a pairwise-interaction network, which exhibits certain clustering structure and accounts for 45% of the entire structure of the interactions within the G7 system. We also find that the pairwise interactions become increasingly inadequate in capturing the synchronization as the size of economic system grows. Thus, higher-order interactions must be taken into account when investigating behaviors of large economic systems.
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