Deterministic macroeconomic dynamic equations from a stochastic microeconomic description: The role of time scales

Abstract

In the present paper, we develop the ‘stochastic’ microeconomic approach to obtained a deterministic macrodynamic equation. Three time scales have to be introduced. To be valid, the dynamic equation has to be written on the meso-scopic time scale. ‘Discrete’ and ‘continuous’ time versions are given. On the other hand, the comparison between the ‘stochastic’ and the ‘average’ (all the agents have the same characteristics, the ‘average’ ones) approaches is presented. Both methods give the same form for the dynamic equation, nevertheless the ‘average’ approach gives conditions of validity which are not strict enough. An advantage of the ‘stochastic’ approach is to inforce this point and to propose a better framework for writing down deterministic macrodynamic equations and for making further developments if necessary.