THERMOECONOMICS - Vocat International Ltd

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Copyright: John Bryant, VOCAT International Ltd 2012, for personal use only.
of each equation. For example, the correlation coefficient for the UK
economy of ds versus dG/G-i is of the order R 2 = 0.44, quite low. Thus
much work is still required to improve and refine the relationships, perhaps
modelling some of the technical changes in the velocity of circulation and
other factors. The initial result is, nevertheless, quite interesting as each of
the results appears to follow the ebb and flow of money entropy change.
Figure 5.18 shows the differences per annum of entropy change ds versus
(dG/G – i) for the UK and USA economies. Order-4 (UK) and order-5
(USA) trend lines have been drawn through each result.
Figure 5.18 Error Differences between entropy change ds and % change Output Value less
interest rates (dG/G – i).
The curves exhibit similar biases, and the trend lines for each have
correlation coefficients of R 2 = 0.54 and 0.52 respectively. Thus correction
for the biases would improve the correlation of the initial result
significantly. Possible improvements may include better long-run modelling
of the value capacity coefficient ω to estimate entropy change.