Information equilibrium as an economic principle
Papers from arXiv.org
A general information equilibrium model in the case of ideal information transfer is defined and then used to derive the relationship between supply (information destination) and demand (information source) with the price as the detector of information exchange between demand and supply. We recover the properties of the traditional economic supply-demand diagram. Information equilibrium is then applied to macroeconomic problems, recovering some common macroeconomic models in particular limits like the AD-AS model, IS-LM model (in a low inflation limit), the quantity theory of money (in a high inflation limit) and the Solow-Swan growth model. Information equilibrium results in empirically accurate models of inflation and interest rates, and can be used to motivate a 'statistical economics', analogous to statistical mechanics for thermodynamics.
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://arxiv.org/pdf/1510.02435 Latest version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1510.02435
Access Statistics for this paper
More papers in Papers from arXiv.org
Series data maintained by arXiv administrators ().