LGEM: A lattice Boltzmann economic model for income distribution and tax regulation

Abstract In this paper, a new econophysics model based on a lattice Boltzmann automata is presented. This model represents economic agents (people, countries...) as particles of a gas moving on a 2D lattice and interacting with each other. Economic transactions are modeled by particle-to-particle interactions in which money is conserved. If only particular transactions are considered (free market), the money distribution quickly converges to a Boltzmann–Gibbs distribution. But the model also introduces a third step of global income distribution that can be used for exploring tax regulation strategies. The model is presented, and some examples of income distribution are given. One of the most interesting features of the model is the fact that it is completely discrete, and it can be exactly implemented on any computational resource, leading to very fast, yet powerful simulations, especially when parallelization resources are available. Some results of these simulations, as well as performance data, are given.