Skip to main content Accessibility help
×
  1. Home
  2. Books
  3. Reconstructing Macroeconomics
  • Cited by 93
Publisher:
Cambridge University Press
Online publication date:
August 2009
Print publication year:
2006
Online ISBN:
9780511510670
DOI:
https://doi.org/10.1017/CBO9780511510670
Subjects:
Economics, Mathematics, International Economics, Economic Theory, Optimisation
Series:
Japan-US Center UFJ Bank Monographs on International Financial Markets
Information

Book description

In this book, 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 have 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. 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.

Reviews

Reviews of the hardback:‘Thoughtful macroeconomists are uncomfortably aware that consumers, firms, and workers vary widely in their local environments, perceptions, and beliefs. Ignoring this heterogeneity, as 'modern macro' does, is a likely source of systematic error. Aoki and Yoshikawa propose to repair this failure by modeling the macroeconomy explicitly as a cloud of interacting particles. The goal is to deduce the distributions of economic characteristics that describe the system as a whole. There are already some surprising beginning results, including a novel treatment of aggregate demand, and one can expect more when their approach is combined with standard economic reasoning. This is the start, not the finish, of a potentially far-reaching research program. It should excite the curiosity of all those thoughtful macroeconomists.'

Robert M. Solow - Massachusetts Institute of Technology

‘This book is a bold and daring challenge to the growing influence of neoclassical equilibrium theory in the field of modern macroeconomics. Not simply an approach to traditional Keynesian theory that attempts to refine it and make it more accurate, the treatment makes use of a new methodology in statistical physics and combinatorial stochastic processes to mount a direct challenge to real business cycle theory and rational expectations theory. Professor Aoki has made important contributions to the application of statistical physics to economics, and Professor Yoshikawa is a leading Japanese economist who has done outstanding work in the fields of both theoretical and empirical economics. This book is the superb product of the optimum combination of these two scholars' different talents.'

Ryuzo Sato - New York University and University of Tokyo

‘Masanao Aoki and Hiroshi Yoshikawa have written no less than the foundation of a new approach (and I believe the right one) to the core problem of macroeconomics, which is to aggregate behaviors by stressing the importance of the heterogeneity and variability of real economic agents. Getting inspiration from and adapting the concepts and tools of statistical physics, they masterfully derive important and novel insights on the most crucial problems of the field: the principle of effective demand, role of uncertainty, sticky prices/wages, and the endogenous business cycle. This book is perhaps the first successful effort to develop macroeconomics as a real science on par with physics, with falsifiable hypotheses underpinned by sound micro-principles and testable predictions.'

Didier Sornette - Swiss Federal Institute of Technology, Zurich

'This book shows the impossibility of efficient equilibria in economics with market clearing mainstream hypotheses when such an economy is populated by a large number of heterogenous agents. In such a case, Aoki and Yoshikawa show that, through combined stochastic processes, a new approach to macroeconomics is not only possible: it is real and this book shows how to reach it.'

Mauro Gallegati - Università Politechnia delle Marche

‘Reconstructing Macroeconomics is an ambitious, informative, challenging … book that addresses fundamental questions of economic theory on many levels. In my view mainstream macroeconomists can only benefit by becoming familiar with the point of view Aoki and Yoshikawa represent so ably here … Those who aspire to create a new macroeconomics, including the various schools of 'heterodox' economics, can also learn a lot from this book.'

Source: Journal of Economic Behavior and Organization

Refine List

Actions for selected content:

Select all | Deselect all
  • View selected items
  • Export citations
  • Download PDF (zip)
  • Save to Kindle
  • Save to Dropbox
  • Save to Google Drive

Save Search

You can save your searches here and later view and run them again in "My saved searches".

Please provide a title, maximum of 40 characters.
Cancel
×

Contents

Contents

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Book summary page views

Total views: 0 *
Loading metrics...

* Views captured on Cambridge Core between #date#. This data will be updated every 24 hours.

Usage data cannot currently be displayed.

Accessibility standard: Unknown

Why this information is here

This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.

Accessibility Information

Accessibility compliance for the PDF of this book is currently unknown and may be updated in the future.