Complex systems modeling of community inclusion currencies

Clark, A., Mihailov, A. ORCID: https://orcid.org/0000-0003-4307-4029 and Zargham, M. (2024) Complex systems modeling of community inclusion currencies. Computational Economics, 64. pp. 1259-1294. ISSN 1572-9974 doi: 10.1007/s10614-023-10445-9

Abstract/Summary

This interdisciplinary paper blends knowledge from computer science and economics in proposing a complex dynamic system subpopulation model for a blockchain form of local complementary currency, generic to the Grassroots Economics Foundation’s Community Inclusion Currency (CIC) implemented in Kenya. Our contribution to the emerging economics literature is five-fold: (i) we take a novel meso-economic approach to elicit utility from actual transactions data and reveal an ‘optimal’ disaggregation number of typical community subgroups; (ii) we relate the local CIC functioning to a nation-wide currency board monetary regime to argue that such a credible CIC implementation ensures trust in the CIC and makes it a valuable market-based channel to alleviate poverty, in addition to humanitarian or government aid channels. However, (iii) we also find evidence in our data that substitutes for real-world money such as CICs are perceived as inferior, and hence CIC systems can only be transitional. Then, (iv) we reveal that, for a poor population, saving dominates as a use of a cluster’s CIC balance, accounting for 47%, followed by purchase of food and water, 25%. Despite these dominant patterns, (v) we uncover a considerable heterogeneity in CIC spending behavior. Our contribution to the related computer-science and Tokenomics literature is two-fold: (i) we provide an open-source scaffold for modeling CIC viability and net flows; (ii) to simulate a subpopulation mixing process, we employ a network-based dynamical system modeling approach that is better grounded in economic principles and monetary theory.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/112656
Identification Number/DOI	10.1007/s10614-023-10445-9
Refereed	Yes
Divisions	Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
Publisher	Springer
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