Money creation and financial instability: An agent-based credit network approach

Arbeitspapier

We pick up the standard textbook approach of money creation and develop a simple agent-based alternative. We show that our model is well suited to explain the endogenous creation of money. Although more general, our model still contains the standard results as a limiting case. We also uncover a potential instability that is hidden in the standard approach but easily recognized within a strict individual-based and stock-flow consistent version. We show in detail how individual interactions build up systemic risk and how banking crises are triggered by the maturity mismatch of different cash-flows and spread by the depreciation of non-performing loans (e.g. interbank- or government debt).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper ; No. 2012-15

Classification and Topics

• Classification: Wirtschaft ; Computational Techniques; Simulation Modeling ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Money Supply; Credit; Money Multipliers ; Financial Crises
• Subject: financial instability ; endogenous money ; agent-based macroeconomics ; stock-flow consistency ; disequilibrium analysis ; Finanzmarktkrise ; Geldschöpfung ; Agentenbasierte Modellierung ; Neukeynesianische Makroökonomik ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lengnick, Matthias ; Krug, Sebastian ; Wohltmann, Hans-Werner
• Event: Veröffentlichung
• (who): Kiel University, Department of Economics
• (where): Kiel
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/67067
• Last update: 10.03.2025, 11:42 AM CET