Beyond the static money multiplier: in search of a dynamic theory of money

Michele Berardi

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we analyze the process of money creation in a credit economy. We start from the consideration that the traditional money multiplier is a poor description of this process and present an alternative and dynamic approach that takes into account the heterogeneity of agents in the economy and their interactions. We show that this heterogeneity can account for the instability of the multiplier and that it can make the system path-dependent. By using concepts and techniques borrowed from network theory and statistical mechanics, we then try to shed some light on the actual process by which money is endogenously created in an economy.

Keywords: Money; Money multiplier; Network theory; Statistical mechanics. (search for similar items in EconPapers)
JEL-codes: E40 E41 E51 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (1)

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Related works:
Chapter: Beyond the Static Money Multiplier: In Search of a Dynamic Theory of Money (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19287

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