Economics at your fingertips  

Statistical mechanics of money: How saving propensity affects its distribution

Anirban Chakraborti and Bikas K. Chakrabarti

Papers from

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. In analogy 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 money distribution.The equilibrium probablity distribution of money becomes the usual Gibb's distribution, characteristic of non-interacting agents, when the agents do not save. However with saving, even for local or individual self-interest, the dynamics become 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 function of the ``marginal saving propensity'' of the agents.

Date: 2000-04, Revised 2000-06
References: View complete reference list from CitEc
Citations View citations in EconPapers (45) Track citations by RSS feed

Published in Eur. Phys. J. B 17, 167 (2000)

Downloads: (external link) Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Papers from
Series data maintained by arXiv administrators ().

Page updated 2017-09-29
Handle: RePEc:arx:papers:cond-mat/0004256