Methods of Economic Theory: Variables, Transactions and Expectations as Functions of Risks

Victor Olkhov

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops methods and framework of economic theory free from general equilibrium tools and assumptions. We model macroeconomics as system of agents those perform transactions with other agents under action of numerous expectations. Agents expectations are formed by economic and financial variables, transactions, expectations of other agents, other factors that impact macro economy. We use risk ratings of agents as their coordinates on economic domain and approximate description of economic variables, transactions and expectations of numerous separate agents by density functions of variables, transactions and expectations of aggregated agents on economic domain. Motion of separate agents on economic domain due to change of agents risk rating produce economic flows of variables, transactions and expectations. These risk flows define dynamics of economic variables and disturb any supposed market equilibrium states all the time. Permanent evolution of market supply-demand states due to risk flows makes general equilibrium concept too doubtful. As example we apply our methods to model assets pricing and return fluctuations.

Keywords: economic theory; risk ratings; economic flows; density functions (search for similar items in EconPapers)
JEL-codes: C00 C50 E30 G0 (search for similar items in EconPapers)
Date: 2019-08-19
New Economics Papers: this item is included in nep-mac, nep-ore and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/95628/1/MPRA_paper_95628.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:95628

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 ().