Four Ingredients for New Approaches to Macroeconomic Modeling

This paper outlines some of the concepts and tools which, although not in the mainstream macroeconomics literature, have been effective either in providing new results, or insights to known results. Briefly put, the new approaches borrow concepts and tools from population genetics, condensed matter physics, and recently developped stochastic combinatorial analysis in statistics. Continuous-time Markov chains are constructed for clusters of heterogeneous types of interacting economic agents. We can then draw macroeconomic policy implications by examining solutions of master (Chapman-Kolomogorv) equations, Fokker-Planck equations or Langevin equations, as the needs call for them. This paper attempts to introduce the reader to some of these new notions, and procedures to gain new insights and results. This paper reports on some of these by loosely organizing them into four sections.(This abstract was borrowed from another version of this item.)