Reconstructing macroeconomics: a perspective from statistical physics and combinatorial stochastic processes

by Aoki, Masanao

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Title Statements

Full title :Reconstructing macroeconomics : a perspective from statistical physics and combinatorial stochastic processes / Masanao Aoki, Hiroshi Yoshikawa.

Summary

The authors treat macroeconomic models as composed of large numbers of micro-units or agents of several types, and explicitly discuss stochastic dynamic and combinatorial aspects of interactions among them. In mainstream macroeconomics sound microfoundations for macroeconomics has meant incorporating sophisticated intertemporal optimization by representative agents into models. Optimal growth theory, once meant to be normative, is now taught as a descriptive theory in mainstream macroeconomic courses. In neoclassical equilibria flexible prices led the economy to the state of full employment and marginal productivities are all equated. Professors Aoki and Yoshikawa contrariwise show that such equilibria are not possible in economies with a large number of agents of heterogeneous types. The authors treat equilibria as statistical distributions and not as fixed points. They employ a set of statistical dynamical tools via continuous-time Markov chains, and statistical distributions of fractions of agents by types available in the new literature of combinatorial stochastic processes, to reconstruct macroeconomic models.

Edition Statements

Publication Date:2007.

Publication Statements

Publisher(s):Cambridge University Press
Place of Publication:Cambridge
Language:eng
Publication Date:2007.

The Physical Object

Description:xviii, 333 pages : : illustrations ; : 25 cm.

Edition Identifiers

ISBN:0521831067, 9780521831062
oclc:ocm69013660
LC Classification:HB172.5
Dewey Decimal:339.01/51923

Introduction: a new approach to macroeconomics -- The methods: jump Markov process and random partitions -- Equilibrium as distribution: the role of demand in macroeconomics -- Uncertainty trap: policy ineffectiveness and long stagnation of the macroeconomy -- Slow dynamics of macro system: no mystery of inflexible prices -- Business cycles: an endogenous stochastic approach -- Labor market: a new look at the natural unemployment and Okun's law -- Demand saturation-creation and economic growth -- The types of investors and volatility in financial markets: analyzing clusters of heterogeneous agents -- Stock proces and the real economy: power-law versus exponential distributions.