Questioning the quantity equation using an agent-based computational model

In the literature we find two opposing hypotheses relating the volume of money to the volume of transactions or national income. The classic hypothesis, implicitly entailed in the quantity equation, argues that this relation must be positive, while an opposing hypothesis, most strongly presented by Stutzel (1954), argues that the functional relationship may as well be negative. Even focusing the money needed to carry out transactions, there is no immediate answer to the question of the functional relationship between trade turnover and money demand. An agent-based computational model is used to explore the relationship. Copyright (C) 1998 IFAC.