Statistical mechanics of money

2000/01/30 by Adrian Dragulescu, A. Dragulescu, Victor M. Yakovenko +1 · 1 voice · 546 citations
Economics, Econometrics and Finance · Physics and Astronomy · #Analogy #Complex Systems and Time Series Analysis #Distribution (mathematics) #Exponential distribution #Exponential function #Probability distribution #Quantity theory of money #Statistical Mechanics and Entropy #Statistical mechanics #Theoretical and Computational Physics #Thermal equilibrium #cond-mat.stat-mech #q-fin.GN

paper · pdf · doi:10.1007/s100510070114

published in The European Physical Journal B 17(4), 723-729 (Springer Science+Business Media) · 7 pages, 5 figures, RevTeX. V.4: final version accepted to Eur. Phys. J. B: few stylistic revisions and additional references

arxiv created 2000/08/04 · openalex publication_date 2000/10/01 · arxiv updated 2009/11/30 · openalex created_date 2016/06/24 · openalex updated_date 2026/08/05

Abstract

In a closed economic system, money is conserved. Thus, by analogy with energy, the equilibrium probability distribution of money must follow the exponential Gibbs law characterized by an effective temperature equal to the average amount of money per economic agent. We demonstrate how the Gibbs distribution emerges in computer simulations of economic models. Then we consider a thermal machine, in which the difference of temperatures allows one to extract a monetary profit. We also discuss the role of debt, and models with broken time-reversal symmetry for which the Gibbs law does not hold.

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Discussions

• Statistical mechanics of money (2000) [hn, 86 points, 60 comments]

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