| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 973951 | Physica A: Statistical Mechanics and its Applications | 2016 | 12 Pages |
•A set of equation for money circulation in the production system is formulated.•The contribution to Gross Domestic Product from the bank system is defined.•The relation of ‘the quantity theory of money’ is justified.
This paper investigates money circulation for a system, consisting of a production system, the government, a central bank, commercial banks and many customers of the commercial banks. A set of equations for the system is written; the theory determines the main features of interaction between production and money circulation. Investigation of the equations in a steady-state situation reveals some relationship among output of the production system and monetary variables. The relation of quantity theory of money is confirmed, whereas a new concept of the efficiency of the system is introduced.
