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Quasi-Static Macroeconomic Systems

Author

Listed:
  • Jamsheed Shorish

    (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper applies quasi-static analysis to a simple closed macroeconomy. It is shown that if the economy satisfies a conservation of income requirement, and the requirement that all equivalent investments generate the same rate of return (non- arbitrage), then there exists a state variable which measures the opportunity cost of moving from one macroeconomic equilibrium to another. This state variable is an economic constraint which measures the expenditure necessary to change equilibria. Central to this analysis is a definition of economic time, which is an invariant quantity with respect to the state variables used as a frame of reference.

Suggested Citation

  • Jamsheed Shorish, "undated". "Quasi-Static Macroeconomic Systems," Economics Working Papers 2000-3, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2000-3
    as

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    File URL: https://repec.econ.au.dk/repec/afn/wp/00/wp00_3.pdf
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    Citations

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    Cited by:

    1. Bo Sandemann Rasmussen, "undated". "Government Debt and Capital Accumulation in the Blanchard-Cass-Yaari OLG Model," Economics Working Papers 2000-14, Department of Economics and Business Economics, Aarhus University.
    2. Nikolaj Malchow-Moeller & Bo Jellesmark Thorsen, "undated". "A Dynamic Agricultural Household Model with Uncertain Income and Irreversible and Indivisible Investments under Credit Constraints," Economics Working Papers 2000-7, Department of Economics and Business Economics, Aarhus University.
    3. Boriss Siliverstovs, 2005. "The Bi-parameter Smooth Transition Autoregressive model," Economics Bulletin, AccessEcon, vol. 3(23), pages 1-11.
    4. Effrosyni Diamantoudi, 2003. "Equilibrium binding agreements under diverse behavioral assumptions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 431-446, September.
    5. Nikolaj Malchow-Moeller & Bo Jellesmark Thorsen, "undated". "Investment under Uncertainty - the Case of Repeated Investment Options," Economics Working Papers 2000-15, Department of Economics and Business Economics, Aarhus University.

    More about this item

    Keywords

    Quasi-static systems; thermodynamics; non-arbitrage; opportunity cost; conservative systems;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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