Statistical mechanics of money: how saving propensity affects its distribution
By Anirban Chakraborti, Bikas K. Chakrabarti. 2000
419 citations recorded by the source corpus.
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. Analogous 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 probability distribution of money. When the agents do not save, the equilibrium money distribution becomes the usual Gibb's distribution, characteristic of non-interacting agents. However with saving, even for individual self-interest, the dynamics becomes 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 functions of the marginal saving propensity of the agents.
Subfields: Economics and Econometrics, Statistical and Nonlinear Physics
View Paper: https://www.semanticscholar.org/paper/0a11bb2594d510ea668370b66743f550d5afe829
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In Economics and Econometrics
In Statistical and Nonlinear Physics
Citations in the corpus
- Econophysics review: II. Agent-based models (2011, neutral): “A ‘saving parameter’ 05 51, representing the fraction of wealth saved, was introduced in the model of Chakraborti and Chakrabarti (2000).”
- Colloquium: Statistical mechanics of money, wealth, and income (2009, methodology): “Another model with an element of proportionality was proposed by Chakraborti and Chakrabarti (2000).9 In this model, the agents set aside (save) some fraction of their money λmi, whereas the rest of their money balance (1−λ)mi becomes available for random exchanges.”
- The Inequality Process as a wealth maximizing process (2005, methodology): “The simplest version of the Inequality Process, the One Parameter Inequality Process (OPIP) [1-23] has different properties from the Saved Wealth Model (SWM) of Chakraborti and Chakrabarti [24], examined and elaborated in[24-30] although the two are isomorphic up to their stochastic drivers and Lux ”
- Econophysics: Empirical facts and agent-based models (2009, neutral): “Relaxation in systems with constant λ had already been studied by Chakraborti and Chakrabarti (2000), where a systematic increase of the relaxation time with λ, and eventually a divergence for λ → 1, was found.”