Money transfers from A to B - in what proportions

Question

I have been thinking about how money is kept moving, being transferred from A to B. And when I say A to B I don't just mean purchasing finished goods, I mean absolutely any transfer for any reason. So that would include:

• Purchasing of raw materials for use by manufacturers.

• Interest payments.

• Rent (both private and commercial)

• tax payments

• dividend / coupon payments

• purchasing of shares or bonds (including HFT)

• Freshly created demand deposits being added to borrowers accounts (creating money)

• Principal repayments to banks (destroying money)

Are there any papers that attempt to estimate these rates of flow as part of a whole picture? I.e. so that we could say things like X% of all money being transferred from A to B (in some unit of time) is for the purpose of Y.

EDIT: This kind of relates to the velocity of money - but in that case you only consider the flow of money when it is being used for the purchase of goods/services that are measured in the GDP figures. But surely the flow of money when being used for any kind of transaction is a fundamental statistic in the economy. I would have thought that central banks at least, would have a go at estimating a breakdown of these flows.

Answer 1

Integrated Macroeconomic Accounts of the United States

Financial Accounts Guide - All Tables:

https://www.federalreserve.gov/apps/fof/FOFTables.aspx

I have been contemplating your question ever since the financial crisis of 2007/2008 and have not found any coherent sources of such data that go beyond the System of National Accounts. In the United States the Fed keeps a set of Integrated Macroeconomic Accounts (IMA) which are a hybrid standard that does not conform directly to SNA so I think these statistic are sometimes designated SNA-IMA. The IMA tables are available under links if you scroll to the bottom of the page under the link above.

Comments regarding System of National Accounts

This 117 page reference is an introduction to the outdated standard called 1993 System of National Accounts:

https://www.imf.org/external/pubs/ft/pam/pam56/pam56.pdf

Table 1 on page 20 is shown below:

The vertical path in this Figure shows flows associated with so-called saving and investment in the production of new goods and services. The vertical path also shows flows of credit called net lending and borrowing. These flows of credit are not strictly limited to the net lending and borrowing necessary for the flow of investment, however, the flow of credit could be to refinance existing assets in the opening balance sheet or to support transactions for the purchase and sale of durable goods already existing in the opening balance sheet.

The horizontal path in this Figure shows Other Economic Flows. This is where the casualty loss, default loss, depreciation, and accounting based re-valuation of assets and liabilities occurs in the National accounts. A systemic bankruptcy event, for example such as the Great Depression, would force the down-ward valuation of assets and destruction of money in the banking sector under this model for other economic flows, and I don't see how such real-world events relate to simple models for velocity of money. A financial bubble would be the up-ward valuation of assets with an expansion of money much smaller than the expansion of assets due to mark-to-market valuation of assets in the Other Economic Flows. If this is how agents in society keep track of wealth then the SNA-IMA structure helps one think about patterns of asset price overshoot and collapse driven by the credit structure rather than by the vertical path of production of goods and services.

How Banks Create and Destroy Money via Credit Deals

The money creation paradox:

https://think.ing.com/uploads/reports/Money_paradox2.pdf

This paper does not provide a reference for the %X question but it provides the details for how money is created and destroyed by the flow of credit and repayment in the bank sector. Also it describes how refinance activity does not necessarily create money when new loans are taken out to repay existing loans. However any research effort that would address your question should incorporate a model like this of the commercial bank sector or elastic money supply sector of the economy.