Tests of thermal macroeconomic theory on simulated micro-economies

TL;DR

This paper evaluates a novel macroeconomic theory inspired by thermodynamics by comparing its predictions with simulated micro-economies, confirming its validity and illustrating its concepts.

Contribution

It introduces thermal macroeconomics, applying thermodynamic principles to macroeconomic modeling and validating it through simulations.

Findings

The theory's predictions align with simulated micro-economy behaviors.

Thermal macroeconomics provides a new framework for understanding aggregate economic phenomena.

Simulations confirm the applicability of thermodynamic analogues in economics.

Abstract

In this paper, we test predictions of a new theory of macroeconomics, called "thermal macroeconomics." The theory aims to apply the mathematical structure of classical thermodynamics, including analogues of temperature and entropy, to predict aspects of the aggregate behaviour of populations of economic agents without analyzing their detailed interactions. We test the theory by comparing its predictions with the behaviour of a variety of simulated micro-economies in which goods and money can be exchanged between agents, confirming the predictions of the theory. The paper serves also to illustrate and make more tangible the predictions of thermal macroeconomics.