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The Markov Process as a Model of Migration Based on the Example of the Movement of Banknotes (Proces Markowa jako model migracji na przykladzie przemieszczania sie banknotow)

Arkadiusz Manikowski ()
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Arkadiusz Manikowski: Faculty of Management, University of Warsaw; Cash & Issue Department, National Bank of Poland

Research Reports, 2021, vol. 2, issue 35, 76-92

Abstract: This paper presents a way of using the Markov chain model for the analysis of migration based on the example of banknote migration between regions in Poland. We have presented the application of the methodology for estimating one-step transition probabilities for the Markov chain based on macro-data gathered during the project conducted in the National Bank of Poland (NBP) in the period of December 2015–2018. We have shown the usefulness of state-aggregated Markov chain not only as a model of banknote migration but as migration in general. The banknotes are considered here as goods, so their migration is strictly related to, inter alia, the movement of people (commuting to work, business trips, etc.).Thus, the gravity-like properties of cash migration pointed to the gravity model as one of the most pervasive empirical models in regional science. Transition probability of the Markov chain expressing the attractive force between regions allows for estimating the gravity model for the identification of relevant reasons of note and, consequently, people migration.

Keywords: migration of people; migration of banknotes; Markov chain; gravity model (search for similar items in EconPapers)
JEL-codes: C60 E51 J61 (search for similar items in EconPapers)
Date: 2021
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