New essentials of economic theory II. Economic transactions, expectations and asset pricing

Victor Olkhov

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents further development of our economic model. We describe economic and financial transactions between agents as factors that define evolution of economic variables. We show that change of risk ratings of agents as their coordinates on economic space due to economic activity or due to other reasons induce flows of economic transactions that contribute significantly to macroeconomic evolution. Transactions are made under numerous expectations of agents and agents establish their expectations on base of economic variables, transactions, other factors that impact economic evolution. We argue that economic value of expectations should be regarded proportionally to economic value of transactions made under these expectations. We describe transition from modeling transactions and expectations of separate agents to description of density functions of transactions and expectations on economic space. We derive systems of equations that describe density functions of transactions, expectations and their flows. We explain how transactions and expectations determine asset pricing and derive price equations. We use our model equations on economic variables, transactions, expectations and their flows for description of particular economic problems in Part III.

Keywords: Economic Theory; Risk Ratings; Economic Space; Economic Transactions; Expectations; Asset Pricing (search for similar items in EconPapers)
JEL-codes: C4 C5 E0 E1 E3 G0 (search for similar items in EconPapers)
Date: 2019-04-20
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/93428/1/MPRA_paper_93428.pdf original version (application/pdf)

Related works:
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:pra:mprapa:93428

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().