Macroeconomic Relaxation: Adjustment Processes of Hierarchical Economic Structures

Masanao Aoki and Raymond Hawkins

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2009, vol. 3, No 2009-17, 21 pages

Abstract: We show how time-dependent macroeconomic response follows from microeconomic dynamics using linear response theory and a time-correlation formalism. This theory provides a straightforward approach to time-dependent macroeconomic model construction that preserves the heterogeneity and complex dynamics of microeconomic agents. We illustrate this approach by examining the relationship between output and demand as mediated by changes in unemployment, or Okun's law. We also demonstrate that time dependence implies overshooting and how this formalism leads to a natural definition of economic friction.

Keywords: Macroeconomic adjustment process; microeconomic dynamics; aggregation; anelastic relaxation; Okun's law; time-correlation formalism (search for similar items in EconPapers)
JEL-codes: A12 C31 D50 E24 J21 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.5018/economics-ejournal.ja.2009-17
https://www.econstor.eu/bitstream/10419/27537/1/economics_2009-17.pdf (application/pdf)

Related works:
Working Paper: Macroeconomic Relaxation: Adjustment Processes of Hierarchical Economic Structures (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:7603

DOI: 10.5018/economics-ejournal.ja.2009-17

Access Statistics for this article

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) is currently edited by Dennis J. Snower

More articles in Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).