Transfer potentials shape and equilibrate monetary systems

Robert Fischer and Dieter Braun

Physica A: Statistical Mechanics and its Applications, 2003, vol. 321, issue 3, 605-618

Abstract: We analyze a monetary system of random money transfer on the basis of double entry bookkeeping. Without boundary conditions, we do not reach a price equilibrium and violate text-book formulas of economist's quantity theory (MV=PQ). To match the resulting quantity of money with the model assumption of a constant price, we have to impose boundary conditions. They either restrict specific transfers globally or impose transfers locally. Both connect through a general framework of transfer potentials. We show that either restricted or imposed transfers can shape Gaussian, tent-shape exponential, Boltzmann-exponential, pareto or periodic equilibrium distributions. We derive the master equation and find its general time-dependent approximate solution. An equivalent of quantity theory for random money transfer under the boundary conditions of transfer potentials is given.

Keywords: Monetary system; Random transfer; Bookkeeping (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:321:y:2003:i:3:p:605-618

DOI: 10.1016/S0378-4371(02)01746-6

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