Skip to content
Register Sign in Wishlist

Reconstructing Macroeconomics
A Perspective from Statistical Physics and Combinatorial Stochastic Processes

$42.00 USD

Part of Japan-US Center UFJ Bank Monographs on International Financial Markets

  • Date Published: October 2007
  • availability: This ISBN is for an eBook version which is distributed on our behalf by a third party.
  • format: Adobe eBook Reader
  • isbn: 9780511331985

$ 42.00 USD
Adobe eBook Reader

You will be taken to for this purchase
Buy eBook Add to wishlist

Other available formats:
Paperback, Hardback

Looking for an inspection copy?

This title is not currently available on inspection

Product filter button
About the Authors
  • In this book, the authors treat macroeconomic models as composed of large numbers of micro-units or agents of several types and explicitly discuss stochastic dynamic and combinatorial aspects of interactions among them. In mainstream macroeconomics sound microfoundations for macroeconomics have meant incorporating sophisticated intertemporal optimization by representative agents into models. Optimal growth theory, once meant to be normative, is now taught as a descriptive theory in mainstream macroeconomic courses. In neoclassical equilibria flexible prices led the economy to the state of full employment and marginal productivities are all equated. Professors Aoki and Yoshikawa contrariwise show that such equilibria are not possible in economies with a large number of agents of heterogeneous types. They employ a set of statistical dynamical tools via continuous-time Markov chains and statistical distributions of fractions of agents by types available in the new literature of combinatorial stochastic processes, to reconstruct macroeconomic models.

    • Senior author Aoki is arguably the world's leading scholar of stochastic analysis in macroeconomics
    • Builds on his two previous books for the Press, both authors major prize winners
    • Treats hot area of multiple interactions of diverse agents
    Read more

    Reviews & endorsements

    Reviews of the hardback: 'Thoughtful macroeconomists are uncomfortably aware that consumers, firms, and workers vary widely in their local environments, perceptions, and beliefs. Ignoring this heterogeneity, as 'modern macro' does, is a likely source of systematic error. Aoki and Yoshikawa propose to repair this failure by modeling the macroeconomy explicitly as a cloud of interacting particles. The goal is to deduce the distributions of economic characteristics that describe the system as a whole. There are already some surprising beginning results, including a novel treatment of aggregate demand, and one can expect more when their approach is combined with standard economic reasoning. This is the start, not the finish, of a potentially far-reaching research program. It should excite the curiosity of all those thoughtful macroeconomists.' Robert M. Solow, Massachusetts Institute of Technology

    'This book is a bold and daring challenge to the growing influence of neoclassical equilibrium theory in the field of modern macroeconomics. Not simply an approach to traditional Keynesian theory that attempts to refine it and make it more accurate, the treatment makes use of a new methodology in statistical physics and combinatorial stochastic processes to mount a direct challenge to real business cycle theory and rational expectations theory. Professor Aoki has made important contributions to the application of statistical physics to economics, and Professor Yoshikawa is a leading Japanese economist who has done outstanding work in the fields of both theoretical and empirical economics. This book is the superb product of the optimum combination of these two scholars' different talents.' Ryuzo Sato, New York University and University of Tokyo

    'Masanao Aoki and Hiroshi Yoshikawa have written no less than the foundation of a new approach (and I believe the right one) to the core problem of macroeconomics, which is to aggregate behaviors by stressing the importance of the heterogeneity and variability of real economic agents. Getting inspiration from and adapting the concepts and tools of statistical physics, they masterfully derive important and novel insights on the most crucial problems of the field: the principle of effective demand, role of uncertainty, sticky prices/wages, and the endogenous business cycle. This book is perhaps the first successful effort to develop macroeconomics as a real science on par with physics, with falsifiable hypotheses underpinned by sound micro-principles and testable predictions.' Didier Sornette, Swiss Federal Institute of Technology, Zurich

    'This book shows the impossibility of efficient equilibria in economics with market clearing mainstream hypotheses when such an economy is populated by a large number of heterogenous agents. In such a case, Aoki and Yoshikawa show that, through combined stochastic processes, a new approach to macroeconomics is not only possible: it is real and this book shows how to reach it.' Mauro Gallegati, Università Politechnia delle Marche

    'Reconstructing Macroeconomics is an ambitious, informative, challenging … book that addresses fundamental questions of economic theory on many levels. In my view mainstream macroeconomists can only benefit by becoming familiar with the point of view Aoki and Yoshikawa represent so ably here … Those who aspire to create a new macroeconomics, including the various schools of 'heterodox' economics, can also learn a lot from this book.' Journal of Economic Behavior and Organization

    See more reviews

    Customer reviews

    Not yet reviewed

    Be the first to review

    Review was not posted due to profanity


    , create a review

    (If you're not , sign out)

    Please enter the right captcha value
    Please enter a star rating.
    Your review must be a minimum of 12 words.

    How do you rate this item?


    Product details

    • Date Published: October 2007
    • format: Adobe eBook Reader
    • isbn: 9780511331985
    • contains: 11 tables
    • availability: This ISBN is for an eBook version which is distributed on our behalf by a third party.
  • Table of Contents

    Preface 1 Masanao Aoki
    Preface 2 Hiroshi Yoshikawa
    1. Introduction - a new approach to macroeconomics
    2. The methods - jump Markov processes and random partitions
    3. Equilibrium as distribution - the role of demand in macroeconomics
    4. Uncertainty trap - policy ineffectiveness and long stagnation of the macroeconomy
    5. Slow dynamics of the macro system - no mystery of inflexible prices
    6. Business cycles - an endogenous stochastic approach
    7. Labor market dynamics - a new look at natural unemployment and Okun's law
    8. Demand saturation - creation and economic growth
    9. The types of investors and volatility in financial markets - analyzing clusters of heterogeneous agents
    10. Stock prices and the real macroeconomy - power-law versus exponential distributions.

  • Authors

    Masanao Aoki, University of California, Los Angeles
    Masanao Aoki is Professor Emeritus in the Department of Economics at the University of California, Los Angeles.

    Hiroshi Yoshikawa, University of Tokyo
    Hiroshi Yoshikawa is Professor of Economics at the University of Tokyo.

Sign In

Please sign in to access your account


Not already registered? Create an account now. ×

Sorry, this resource is locked

Please register or sign in to request access. If you are having problems accessing these resources please email

Register Sign in
Please note that this file is password protected. You will be asked to input your password on the next screen.

» Proceed

You are now leaving the Cambridge University Press website. Your eBook purchase and download will be completed by our partner Please see the permission section of the catalogue page for details of the print & copy limits on our eBooks.

Continue ×

Continue ×

Continue ×

Find content that relates to you

Join us online

This site uses cookies to improve your experience. Read more Close

Are you sure you want to delete your account?

This cannot be undone.


Thank you for your feedback which will help us improve our service.

If you requested a response, we will make sure to get back to you shortly.

Please fill in the required fields in your feedback submission.