A Simple Linear Algebraic Approach to Capture the Dynamics of the Circular Flow of Income

TL;DR

This paper introduces a straightforward linear algebraic method to quantitatively model the dynamics of the circular flow of income in economies, offering insights applicable across economics, physics, and econophysics.

Contribution

It presents a novel, simple linear algebraic framework to analyze the circular flow of income, bridging economics with physics and econophysics.

Findings

Provides a quantitative model of income flow dynamics

Highlights interdisciplinary implications

Simplifies complex economic interactions

Abstract

This article has one single purpose: introduce a new and simple, yet highly insightful approach to capture, fully and quantitatively, the dynamics of the circular flow of income in economies. The proposed approach relies mostly on basic linear algebraic concepts and has deep implications for the disciplines of economics, physics and econophysics.