Asymmetric Information and Macroeconomic Dynamics

Physica A, Vol. 389, pp. 3565-3571, 2010

Posted: 21 Mar 2011

See all articles by Raymond J. Hawkins

Raymond J. Hawkins

University of Arizona - College of Optical Sciences

Masanao Aoki

University of California, Los Angeles (UCLA) - Department of Economics

B. Roy Frieden

University of Arizona - College of Optical Sciences

Date Written: May 6, 2010

Abstract

We show how macroeconomic dynamics can be derived from asymmetric information. As an illustration of the utility of this approach we derive the equilibrium density, non-equilibrium densities and the equation of motion for the response to a demand shock for productivity in a simple economy. Novel consequences of this approach include a natural incorporation of time dependence into macroeconomics and a common information theoretic basis for economics and other fields seeking to link micro-dynamics and macro-observables.

Keywords: Macroeconomics, Asymmetric Information, Fisher Information, Productivity

Suggested Citation

Hawkins, Raymond J. and Aoki, Masanao and Frieden, B. Roy, Asymmetric Information and Macroeconomic Dynamics (May 6, 2010). Physica A, Vol. 389, pp. 3565-3571, 2010, Available at SSRN: https://ssrn.com/abstract=1787550

Raymond J. Hawkins (Contact Author)

University of Arizona - College of Optical Sciences ( email )

1630 E. University Blvd.
Tucson, AZ 85721
United States

Masanao Aoki

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States

B. Roy Frieden

University of Arizona - College of Optical Sciences ( email )

1630 E. University Blvd.
Tucson, AZ 85721
United States

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