Modelling, simulation and control of macro economic systems.

Abstract

Today's Basel-type banking system is compared with a 100% reserve banking system. Furthermore, negative interest rate on deposits is introduced for these two systems thus two new models are introduced. Eventually all four models are compared with each other in terms of debt crisis mechanisms and if they are prone to enter a liquidity trap. The comparing is done for debt to GDP ratio around a certain ratio of 60% thought to give neutral confidence, thus the effect from confidence dynamics can be excluded for these simulations.