Real taxation and production in a monetary economy with spatially differentiated agents

Petia Manolova (), Charles Lai-Tong () and Christophe Deissenberg
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Petia Manolova: GREQAM-CNRS
Charles Lai-Tong: CEFI-CNRS

Modeling, Computing, and Mastering Complexity 2003 from Society for Computational Economics

Abstract: The impact of money supply on the real variables and on utility is an important question in monetary economics. Most previous works study this impact in representative agent economies, often under perfect foresight. With such a framework, however, the use of fiat money as a medium of exchange cannot be endogenously explained. This paper, by contrast, considers an economy where fiat money is intrinsically necessary for exchange, due to the local structure of interaction among agents. It investigates the transitory and permanent impact of local or global injections of money on the dynamics of produced quantities and exchanged quantities, prices, and individual welfare, and the mechanisms that explain this evolution. Furthermore, it examines the impact of real taxation on the above-mentionned variables.

Keywords: economics; spatially differentiated agents; fiat money; decentralized exchange; monetary growth; distribution; taxation. (search for similar items in EconPapers)

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