Demand Deficiency, Money Velocity and Heterogeneity

• Autorzy: Sidika Basci , Tahar Gherbi
• Języki publikacji: EN

Abstrakty

EN

Aim: Money velocity data for the United States show that there is a decline in all of the broad money aggregates in recent decades. This points to a sustained demand deficiency element. Can consumer heterogeneity be the cause of this declining trend? The aim of this paper is to find an answer for this question. Design / Research Methods: To achieve our aim we use Agent Based Modelling (ABM). In our model, the agents are heterogeneous consumers with different spending propensities. Conclusions / findings: We show that heterogeneous consumers with different spending propensities alone puts a downward pressure on money velocity. This pressure is coupled with a sustained worsening in the wealth distribution. We observe that as money accumulates in the hands of agents with the lowest propensity to spend, money velocity keeps declining. This also puts a downward pressure on nominal aggregate demand and hence a deflationary bias on the general price level. Originality / value of the article: This paper shows that heterogeneity of economic agents should not be ignored and that ABM is a very powerful tool to analyse heterogeneity. Implications of the research: The implication for policy makers is that the demand deficiency associated with the fall in money velocity will persist until the worsening of wealth dispersion comes to a halt.(original abstract)

Słowa kluczowe

EN

Money demand; Money

PL

Popyt na pieniądze; Pieniądz

• Czasopismo: Central European Review of Economics and Management
• Rocznik: 2020
• Tom: 4
• Numer: nr 2 Contemporary Issues of Behavioral Research in Business, Economics and Finance
• Strony: 137--153

Twórcy

autor

Sidika Basci

• Ankara Yildirim Beyazit University, Turkey and EISTI, Cergy, France

autor

Tahar Gherbi

• EISTI, Cergy, France

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Identyfikatory

DOI

10.29015/cerem.865