Using systems engineering software to build a model of the monetary circuit

Steve Keen

No 78, Computing in Economics and Finance 2004 from Society for Computational Economics

Abstract: The Circuitists are a largely European school of economic thought that argue that a monetary economy is fundamentally different to a barter system, and that therefore money cannot be simply modelled as the n+1th good in a Walrasian general equilibrium system. However, while the School has made major contributions to the theory of endogenous money, it has not yet succeeded in constructing a model of the monetary circuit, which is its alternative to general equilibrium modelling. Starting from the first principles by which the School derives its powerful insights into a monetary economy, I construct a simple closed dynamic model of the circuit using systems engineering software (Mathcad). The model's behavior contradicts several propositions previously derived by Circuitists using either equilibrium conditions or unclosed dynamic models

Keywords: Non-neoclassical economics; Post Keynesian economics; Dynamics; Systems Engineering (search for similar items in EconPapers)
JEL-codes: B15 C59 C63 E12 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: https://EconPapers.repec.org/RePEc:sce:scecf4:78

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