Virtual Economies and Macroeconomic Dynamics: Analyzing the Money Market and Inflation in Old School RuneScape

Abstract

This thesis examines the macroeconomic dynamics of Old School RuneScape (OSRS). The game has a large-scale virtual economy, which is inspected through established economic theories. By constructing a Consumer Price Index (CPI) from long-standing in-game items, the thesis quantifies inflation and deflation trends from 2015–2025. Results show inflationary cycles during periods of rapid gold generation, followed by deflation after the introduction of monetary controls such as the Grand Exchange tax. The Quantity Theory of Money explains long-run price movements, while the Aggregate Supply–Aggregate Demand framework captures short-term update-driven shocks. Analysis of bond price trends reveals strong links between OSRS’s virtual economy and real-world currency markets. Jagex, who is the game’s developer, effectively acts similarly to a central bank, managing money supply and price stability through gold sinks and monetary interventions. The findings suggest that, despite design-specific constraints, traditional macroeconomic models are applicable to virtual economies, offering valuable insights into both digital and real-world monetary systems.