Saturday, March 16, 2013

On Possible Formalism of Austrian Economics

NOTICE
  • Never take seriously and DO NOT TRUST THE FOLLOWING
  • "Austrian Economics" in this post might share nothing with historical Austrian Economics
Least of Hilbert Space
  • space of superposed harmonics with different phases
History (too partial and biased)
  • Menger(father): originator, one of the marginal revolutionists
  • Böhm-Bawerk: "wavy" view of economic reality
  • Wieser: imputation (= decomposition of wealth)
  • Mises(Lutwig): (Sorry, I know nothing about him)
  • Hayek: "pure" capital theory and business cycle
  • Schumpeter: rotation of capital and innovators' roles
  • Menger(son): Brouwer's student, sought axiomatics for economics
  • Morgenstern: collaborator of von Neumann and coauthor of TGEB
Possible Formalism
  • enterprises and national economies as fields
  • business cycles and prices as wave functions
  • portfolio as state vector
  • term structures as spectra
  • capital and social wealth as functional, which could be decomposable
  • quantities of bonds, or elements of the state vector, should be chosen for maximizing certain wealth functional (fixed point theorems assure that)
  • risk and danger as hypothetical extremely long-term (infrared) bond with somewhat uncertain remaining duration (wave length) and quantity, which insurance companies might need to cover their contracts
  • inflation rate, or "mean" return as curvature on timeline
TODO
  • define equilibrium interest rates and explain economic meaning of eigenvalue
  • complete explaination of economic meaning of FPTs in relation to Austrian understanding of "equilibria"
  • treat consumption and surplus, not as depreciation of laborers' capital
  • show similarity and difference to historical Austrian Economics
  • show similarity and difference to pre-crisis mainstream macroeconomics
  • show similarity and difference to modern finance

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