LOGO Reporter: Jing Huang Monetary Circulation Model of A Local Economy in Globalization

Outline Basic concept 1 Model 2 Equilibrium analysis 3 Simulation on dynamic process 4

Basic concepts  A stock variable:  measured at one specific time, and represents a quantity existing at a point of time, which may have been accumulated in the past.  A flow variable:  measured over an interval of time. Therefore a flow would be measured per unit of time. Flow is roughly analogous to rate or speed in this sense. And the differences between two flows will result in the change in stock.

Model - Considering unemployment Lu LoLi

Model-Basic Variables and relation(1/6)  the amount of money that flows into a local economy :  the amount of money that flows out of the local economy at time t :  the aggregate amount of money that circulates in the local economy:  The relationship among stock, in-flow and out-flow:

 Variables-Expenditures:  Total expenditures of local people at time t:  The expenditures on global goods at time t: This can be treated as out-flow of money.  The volume of local transactions at time t: Model-Basic Variables and relation(2/6)

 relation between in-flow and wages earned outside  the total income obtained from local expenditures:  local wage Model-Basic Variables and relation(3/6)

Model - Basic Variables and relation (4/6)  The number of potential positions provided in local economy where is the expected wage obtained from inside.

Model-Basic Variables and relation(5/6)  The changes of the number of people who work locally lose their job:  The changes of the number of unemployed people hired inside if the local economy :

Model-Basic Variables and relation(6/6)  The changes of unemployed people hired outside where is a time factor how long unemployed people would be hired outside.  The changes of unemployed people hired outside where is turnover rate.

Equilibrium analysis  If where

Equilibrium analysis  If

Simulation results,,,,,, ，  functions  Parameters  Initial

Simulation results

Simulation results-shock 1

Simulation results-shock 2

Simulation results-shock 3

Simulation results-shock 4

Simulation results-shock 5

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