Abstract
Professors Aoki and Yoshikawa adopted a variety of concepts from statistical physics and combinatorial stochastic processes to various problems in economics (such as labor markets, real growth, consumption, unemployment, financial market, productivity difference, etc.). In order to analyze these phenomena, they depart from the standard methods of model construction and analysis in mainstream economics and use methods that generally fall into two broad categories. One deals with stochastic dynamics, and the other with the formation of clusters and random combinatorial analysis. The authors build their new macroeconomics on the observation that the huge number of heterogeneous agents act stochastically different based on individual insights, tastes, goals, etc. In this approach the properties of economic systems are described by macroscopic dynamical equations of motion that are nonlinear partial differential equations, such as backward and forward Kolmogorov equations (known as a Chapman-Kolmogorov equation and Fokker-Planck equations).
Highlights
The authors of this book adopted a variety of concepts from statistical physics and combinatorial stochastic processes to various problems in economics
This book is concerned with understanding the properties of economic systems described by macroscopic dynamical equations of motion that are nonlinear partial differential equations, such as backward and forward Kolmogorov equations
As expressed by Stanley et al (1996), “Statistical physicists have determined that physical systems which consist of a large number of interacting particles obey universal laws that are independent of the macroscopic details”
Summary
The authors of this book adopted a variety of concepts from statistical physics and combinatorial stochastic processes to various problems in economics (such as labor markets, real growth, consumption, unemployment, financial market, productivity difference and etc.). Fluctuations in non-equilibrium systems frequently have a rectifying effect, providing a sense of direction He states that in many ways the lack of concern with dynamics makes the general equilibrium theory of economics like meteorology without the weather. We need different approach and in this book the author note that it is often necessary to look at sample paths and probability distribution, not just moments of stochastic variables to understand the behavior of the macroeconomic system. The model in this book and the Diamond model are obviously quite similar where the agents faces uncertainty and their behavior is stochastic but the difference arises from the existence of microeconomic fluctuations in the model presented in the book. The macroequilibirum is observed as a probability distribution and describe by a partial differential equation (Chapman-Kolmogorov equation) instead of an ordinary differential equation
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