Thermodynamic structure of a macroeconomic model

Takuma Tanaka ()
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Takuma Tanaka: Faculty of Data Science, Shiga University

No 30, Discussion Papers CRR Discussion Paper Series A: General from Shiga University, Faculty of Economics,Center for Risk Research

Abstract: This paper reports a novel mathematical structure of economic models with rational agents. Taking a cash-in-advance (CIA) model as an example, I show that macroscopic conservation and irreversibility laws, which are similar to those in thermodynamics, hold for the model. These properties allow for defining internal energy, Helmholtz free energy, entropy, and temperature. Thermodynamic relations among these quantities are also proven for the model. Possible extensions to and implications for macroeconomic models are discussed.

Keywords: CIA model; land; thermodynamics; irreversibility (search for similar items in EconPapers)
JEL-codes: E37 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2018-05
New Economics Papers: this item is included in nep-mac
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https://www.econ.shiga-u.ac.jp/risk/DPA30Tanaka20180510.pdf First version, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:shg:dpapea:30

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