Resource title

Macroeconomic Relaxation: Adjustment Processes of Hierarchical Economic Structures

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Resource description

We show how time-dependent macroeconomic response follows from microeconomic dynamics using linear response theory and a time-correlation formalism. This theory provides a straightforward approach to time-dependent macroeconomic model construction that preserves the heterogeneity and complex dynamics of microeconomic agents. We illustrate this approach by examining the relationship between output and demand as mediated by changes in unemployment, or Okun's law. We also demonstrate that time dependence implies overshooting and how this formalism leads to a natural definition of economic friction.

Resource author

Raymond Hawkins, Masanao Aoki

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Resource publish date

Resource language

eng

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text/html

Resource resource URL

http://hdl.handle.net/10419/27471

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Adapt according to the presented license agreement and reference the original author.