Money, Cycles and Complexity

Please cite the paper as:
Prof. Dr. G. T. Ganchev, (2017), Money, Cycles and Complexity, World Economics Association (WEA) Conferences, No. 2 2017, Economic Philosophy: Complexities in Economics, 2nd October to 30th November 2017

Abstract

The main idea of the present paper is that the appropriate inclusion of money and monetary circulation into economic analysis implies shift from acyclic to cyclic economic mathematical models. In the same tame such transition allows for the analysis of more complex economic instances, complexity being viewed in terms of computational complexity. Remarkably, the emergence and development of complex cyclical economic systems is actually possible only in the context of risk and uncertainty.

2 comment

  • Roy Langston says:

    The attempt to relate your analysis of non-neutral money to real economies does not appear to account for the divergent economic effects of different types of money, especially the divergent conditions of their issuance and withdrawal. In particular, it seems premature to declare commodity money like gold (which would a priori be expected to show negative feedback, thus damping cycles) a source of cyclical instability when the actual “gold standard” economies you refer to used much more of other forms of money (fiat money, debt money and deposit money that could a priori be expected to show positive feedback, thus creating cycles) than they did of gold. Any valid empirical analysis of such economies’ behavior through time would have to include a full disaggregation of their monetary issuance, stocks, and withdrawals into the four types of money. The difficulty of obtaining such data does not justify oversimplified analysis or claims of empirically observed relationships based thereon.

  • Ganchev says:

    My idea was that all types of money, irrespectively of their origin, must create cycles, for otherwise there will be accumulation of monetary assets in some agents and liabilities in others, so the monetary system will be disturbed. Next, since the cycles are complex objects, the problem reduces to how these complex objects may emerge and the somewhat paradoxical answer is that these complex objects can only exists if they are based on risky or uncertain connections.

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