Abstract
Modern macroeconomics is built on “micro foundations.” Namely, optimization of micro agent such as consumer and firm is explicitly analyzed in model. Toward this goal, standard model presumes “the representative” consumer/firm, and analyzes its behavior in detail. However, the macroeconomy consists of 107 consumers and 106 firms. For the purpose of analyzing such macro system, it is meaningless to pursue the micro behavior in detail. In this respect, there is no essential difference between economics and physics. The method of statistical physics can be usefully applied to the macroeconomy, and provides Keynesian economics with correct micro-foundations.
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Yoshikawa, H. Micro-foundations for macroeconomics: New set-up based on statistical physics. Eur. Phys. J. Spec. Top. 225, 3337–3344 (2016). https://doi.org/10.1140/epjst/e2016-60163-8
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DOI: https://doi.org/10.1140/epjst/e2016-60163-8