publication . Research . Article . 2018

Money circulation and debt circulation: A restatement of quantity theory of money

Xiaoyun Xing; Wanting Xiong; Liujun Chen; Jiawei Chen; Yougui Wang; H. Eugene Stanley;
Open Access English
  • Published: 01 Jan 2018
  • Publisher: Kiel: Kiel Institute for the World Economy (IfW)
Abstract
Both money and debt are products of credit creation of banks. Money is always circulating among traders by facilitating commodity transactions. In contrast, debt is created by borrowing and annihilated by repayment as it is matured. However, when this creation- annihilation process is mediated by banks which are constrained by a credit capacity, there exists continuous transfer of debt among debtors, which can be defined as debt circulation. This paper presents a multi-agent model in which income determination, credit creation, and credit transaction are integrated. A hypothetical economy composed of a banking system and multiple traders is proposed, in which th...
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free text keywords: E51, E27, G21, money circulation, debt circulation, holding time distribution, quantity theory of money, ddc:330, lcsh:Social Sciences, lcsh:H, lcsh:Economics as a science, lcsh:HB71-74
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