Systems Theory of Macroeconomics, Introduction to
AbstractIn spite of elaborate descriptive and correlational studies, the most ubiquitous phenomenon in economics, namely inflation, has remained unexplained in terms of its mathematical origins. Keynes had attempted to relate inflation to a mechanism of "sticky wages and prices". Hitherto, such theories of inflation have remained unproven and disputable. Recently, during the so-called "New Economy" era, characterized by a spread of electronic transactions and Internet commerce, inflation eluded policy-makers in a different way, this time by displaying a paradoxically slow rate, 2.5-3.7% since 1994, despite rapid expansion of the U.S. economy. The Systems Theory of Macroeconomics (STM) indicates an erroneous construction in Say's Identity and Walras Law as well as the derived concepts associated with equilibrium theories which have been fundamental for all schools of thought in economics. Subsequently, STM relates inflation to a state function, namely entropy, and derives it as an irreversible process. The part of STM that equates inflation with cost pressures stemming from entropy constitutes the Special Theory. General Theory attempts to quantify and unify the effects of fiscal, monetary and social policies through corrections made to the Quantity Theory, thus modeling the short and long term effects of these policies in tandem or combined, in effect serving to more accurately predict the transmissional dynamics of monetary policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0111004.
Date of creation: 26 Nov 2001
Date of revision: 27 Nov 2001
Note: Transdisciplinary work open for discussion and contributions as well as co-authorship,intersecting systems science, macroeconomics, mathematical and computational modeling. (minor changes in formating and editing was made on 11/27/01, replacing the original)
Contact details of provider:
Web page: http://126.96.36.199
systems theory; inflation; entropy; policy-making; graph topology; complex systems; Walrasian equilibrium; Say's Equality; formalization; input-output analysis;
Find related papers by JEL classification:
- C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.