Economic Complexity and Equilibrium Illusion: Essays on market instability and macro vitality

by Ping Chen (Editor)

Overview

The Principle of Large Numbers indicates that macro fluctuations have weak microfoundations; persistent business cycles and interrupted technologies can be better characterized by macro vitality and meso foundations. Economic growth is limited by market extent and ecological constraints. The trade-off between stability and complexity is the foundation of cultural diversity and mixed economies. The new science of complexity sheds light on the sources of economic instability and complexity.

This book consists of the major work of Professor Ping Chen, a pioneer in studying economic chaos and economic complexity. They are selected from works completed since 1987, including original research on the evolutionary dynamics of the division of labour, empirical and theoretical studies of economic chaos and stochastic models of collective behavior. Offering a new perspective on market instability and the changing world order, the basic pillars in equilibrium economics are challenged by solid evidence of economic complexity and time asymmetry, including Friedman’s theory of exogenous money and efficient market, the Frisch model of noise-driven cycles, the Lucas model of microfoundations and rational expectations, the Black-Scholes model of option pricing, and the Coase theory of transaction costs.

Throughout, a general theory based on complex evolutionary economics is developed, which integrates different insights from Marx, Marshall, Schumpeter, Keynes and offers a new understanding of the evolutionary history of division of labour. This book will be of interest to postgraduates and researchers in Economics, including macroeconomics, financial economics, advanced econometrics and economic methodology.

Product Details

ISBN-13:	9781136994876
Publisher:	Taylor & Francis
Publication date:	04/05/2010
Series:	Routledge Frontiers of Political Economy
Sold by:	Barnes & Noble
Format:	eBook
Pages:	272
File size:	7 MB

About the Author

Ping Chen is a Professor at the National School of Development at Peking University in Bejing, China.

Table of Contents

1. Introduction Part 1 Methodological review: economic complexity, equilibrium illusion, and evolutionary dynamics 2. Equilibrium illusion, economic complexity, and evolutionary foundation of economic analysis (2008) 3. Evolutionary economic dynamics: persistent business cycles, disruptive technology, and the trade-off between stability and complexity (2005) Part 2 Macro vitality: trend-cycle separation, economic chaos and persistent cycles 4. Empirical and Theoretical Evidence of Economic Chaos (1988) 5. Searching for Economic Chaos: A Challenge to Econometric Practice and Nonlinear Tests (1993) 6. A Random Walk or Color Chaos on the Stock Market? - Time-Frequency Analysis of S&P Indexes (1996) 7. Trends, Shocks, Persistent Cycles in Evolving Economy: Business Cycle Measurement in Time-Frequency Representation (1996) Part 3 Micro interaction and population dynamics: learning, communication, and market share competition 8. Origin of Division of Labor and Stochastic Mechanism of Differentiation (1987) 9. Imitation, Learning, and Communication: Central or Polarized Patterns in Collective Actions (1991) 10. Needham's Question and China's Evolution - Cases of Nonequilibrium Social Transition (1990) 11. China's Challenge to Economic Orthodoxy: Asian Reform as an Evolutionary, Self-Organizing Process (1993) Part 4 Equilibrium illusion and meso foundation: perpetual motion machine, representative agents, and organization diversity 12. The Frisch Model of Business Cycles - A Spurious Doctrine, but a Mysterious Success (1999) 13. Microfoundations of Macroeconomic Fluctuations and the Laws of Probability Theory: the Principle of Large Numbers vs. Rational Expectations Arbitrage (2002) 14. Complexity of Transaction Costs and Evolution of Corporate Governance (2007) Part 5 Market instability, natural experiments, and government policy 15. Market Instability and Economic Complexity: Theoretical Lessons from Transition Experiments (2006) 16. From an Efficient to a Viable International Financial Market (2009) Epilogue

Editorial Reviews

‘The book is a collection of Professor Chen’s twenty plus years of original and provocative work on macroeconomics. He has questioned the empirical validity of rational expectation theory’s micro foundation and attempted to provide an alternative formulation based on complexity science and evolution theory. The book is a valuable contribution to macroeconomics and timely input to the understanding of and debate on current global crisis.’

 

- Justin Yifu Lin, Chief economist and Senior Vice President, The World Bank, USA

 

‘Ping Chen, a disciple of Prigogine, is an original voice from China, well worth listening to.’

 

- George Soros, Soros Fund Management LLC, USA

From the Publisher