2011/02/01 by Robert W. Easton, Easton, Robert W.
Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Economic theories and models #FOS: Economics and business #General Finance (q-fin.GN)
paper · pdf · doi:10.48550/arxiv.1102.0312
openalex publication_date 2011/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Agents buy and sell services. All services are of equal quality. Buyers choose sellers at random. Monetary and fiscal policies are imposed by a central bank and a central government. Credit is supplied by a commercial banking system. Propensities to buy, sell, and lend depend on account balances, interest rates, tax rates and loan default rates. Computer simulations track weekly sales, loans, account balances, commercial bank profits, solvency and compliance with reserve requirements, and government debt. The model of this economy is fully specified by a computer program. The program allows the user to explore the effects of parameter changes. Monetary and fiscal policies are implemented by choices of parameters such as interest rates and reserve requirements, and government tax and spending rates. Credit supply, consumer confidence, and loan default rates strongly affect the behavior of the economy in terms of sales.