IDEAS home Printed from https://ideas.repec.org/p/tky/fseres/2003cf197.html
   My bibliography  Save this paper

Uncertainty, Policy Ineffectiveness, and Long Stagnation of the Macroeconomy

Author

Listed:
  • Masanao Aoki

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

  • Hiroshi Yoshikawa

    (Faculty of Economics, University of Tokyo)

Abstract

The standard analysis in macroeconomics depends on the assumption of the representative agent. However, when the degree of uncertainty becomes significant, we cannot ignore a simple fact that the macroeconomy consists of a large number of heterogeneous agents. In this paper, we demonstrate the importance of the combinatory aspect. Specifically, the effectiveness of policy necessarily weakens as the degree of uncertainty rises. One might call this probrem "uncertainty trap". This may contribute to long stagnation of the macroeconomy.

Suggested Citation

  • Masanao Aoki & Hiroshi Yoshikawa, 2003. "Uncertainty, Policy Ineffectiveness, and Long Stagnation of the Macroeconomy," CIRJE F-Series CIRJE-F-197, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2003cf197
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2003/2003cf197.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tobin, James, 1975. "Keynesian Models of Recession and Depression," American Economic Review, American Economic Association, vol. 65(2), pages 195-202, May.
    2. Hiroshi Yoshikawa, 2003. "The Role of Demand in Macroeconomics," The Japanese Economic Review, Japanese Economic Association, vol. 54(1), pages 1-27, March.
    3. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
    4. Aoki, Masanao, 1998. "Simple Model Of Asymmetrical Business Cycles: Interactive Dynamics Of A Large Number Of Agents With Discrete Choices," Macroeconomic Dynamics, Cambridge University Press, vol. 2(4), pages 427-442, December.
    5. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    6. Martin Neil Baily, 1978. "Stabilization Policy and Private Economic Behavior," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(1), pages 11-60.
    7. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    8. L. Ingber, 1982. "Statistical mechanics of neocortical interactions. I. Basic formulation," Lester Ingber Papers 82ni, Lester Ingber.
    9. Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
    10. L. Ingber, 1986. "Statistical mechanics of neocortical interactions," Lester Ingber Papers 86ni, Lester Ingber.
    11. Aoki,Masanao, 1998. "New Approaches to Macroeconomic Modeling," Cambridge Books, Cambridge University Press, number 9780521637695.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Masanao Aoki, 2004. "New Frameworks for Macroeconomic Modelings: Some Illustrative Examples," UCLA Economics Online Papers 306, UCLA Department of Economics.
    2. Paulo Mota & José Varejão & Paulo Vasconcelos, 2015. "A hysteresis model-based indicator for employment adjustment rigidity," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 547-569, August.
    3. Belke, Ansgar & Kotz, Hans-Helmut & Paul, Stephan & Schmidt, Christoph M. (ed.), 2009. "Wirtschaftspolitik im Zeichen europäischer Integration: Festschrift für Wim Kösters anlässlich seines 65. Geburtstages," RWI Schriften, RWI - Leibniz-Institut für Wirtschaftsforschung, volume 83, number 83.
    4. Boris Cournède & Diego Moccero, 2009. "Is there a Case for Price-level Targeting?," OECD Economics Department Working Papers 721, OECD Publishing.
    5. Toshihiro Shimizu, 2017. "Heterogeneity of expectations and financial crises: a stochastic dynamic approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(3), pages 539-560, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre Fortin, 2003. "Keynes resurrected," Cahiers de recherche du Département des sciences économiques, UQAM 20-21, Université du Québec à Montréal, Département des sciences économiques.
    2. Ernst Fehr & Jean-Robert Tyran, 1999. "Does Money Illusion Matter? An Experimental Approach," CESifo Working Paper Series 184, CESifo.
    3. Pontiggia, D., 2012. "Optimal long-run inflation and the New Keynesian model," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1077-1094.
    4. L. Ingber & P.L. Nunez, 1995. "Statistical mechanics of neocortical interactions: High resolution path-integral calculation of short-term memory," Lester Ingber Papers 95ni, Lester Ingber.
    5. L. Ingber, 1984. "Statistical mechanics of neocortical interactions. Derivation of short-term-memory capacity," Lester Ingber Papers 84ni, Lester Ingber.
    6. L. Ingber, 1986. "Riemannian contributions to short-ranged velocity-dependent nucleon-nucleon interactions," Lester Ingber Papers 86rc, Lester Ingber.
    7. L. Ingber & H. Fujio & M.F. Wehner, 1991. "Mathematical comparison of combat computer models to exercise data," Lester Ingber Papers 91mc, Lester Ingber.
    8. Jean-Luc Gaffard & Mauro Napoletano, 2018. "Hétérogénéité des agents, interconnexions financières et politique monétaire : une approche non conventionnelle," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 201-231.
    9. L. Ingber, 1994. "Statistical mechanics of neocortical interactions: Path-integral evolution of short-term memory," Lester Ingber Papers 94ni, Lester Ingber.
    10. Hiroshi Yoshikawa, 2011. "Stochastic Macro-equilibrium and A Microfoundation for the Keynesian Economics," CIRJE F-Series CIRJE-F-827, CIRJE, Faculty of Economics, University of Tokyo.
    11. Ernst Fehr & Jean-Robert Tyran, 2001. "Does Money Illusion Matter?," American Economic Review, American Economic Association, vol. 91(5), pages 1239-1262, December.
    12. L. Ingber, 2006. "Statistical mechanics of neocortical interactions: Portfolio of physiological indicators," Lester Ingber Papers 06pp, Lester Ingber.
    13. Thomas I. Palley, 2018. "Monetary policy and the punch bowl: the case for quantitative policy and wage growth targeting," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 15(1), pages 32-46, April.
    14. Xavier Timbeau, 2012. "The fireman and the architect," Chapters, in: Robert M. Solow & Jean-Philippe Touffut (ed.), What’s Right with Macroeconomics?, chapter 1, pages 8-32, Edward Elgar Publishing.
    15. L. Ingber, 1992. "Generic mesoscopic neural networks based on statistical mechanics of neocortical interactions," Lester Ingber Papers 92gm, Lester Ingber.
    16. Dutt, Amitava K. & Ros, Jaime, 2007. "Aggregate demand shocks and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 75-99, March.
    17. Katsuhito Iwai, 1976. "On Disequilibrium Economic Dynamics. Part IV. The Theory of Long-Run Phillips Curve," Cowles Foundation Discussion Papers 423, Cowles Foundation for Research in Economics, Yale University.
    18. Fuchi, Hitoshi & Oda, Nobuyuki & Ugai, Hiroshi, 2008. "Optimal inflation for Japan's economy," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 439-475, December.
    19. Pissarides, Christopher A., 2015. "Dale Mortensen: An appreciation," Research in Economics, Elsevier, vol. 69(1), pages 1-6.
    20. Gauti B. Eggertsson, 2008. "Great Expectations and the End of the Depression," American Economic Review, American Economic Association, vol. 98(4), pages 1476-1516, September.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2003cf197. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CIRJE administrative office (email available below). General contact details of provider: https://edirc.repec.org/data/ritokjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.