Financial Market in a Macro Accounting General Equilibrium Model

The balance of macro accounting requires that there are economic entities have opposite preferences and take opposite economic activities like mirror copy (Nshi(2017)). This paper provides examples of uses of the symmetry rule for financial markets.

Most important implication of the symmetry rule, financial trades keep total wealth in the economy to be invariant. That is, the nature of financial market is zero-sum game. Of course, the return on the actual financial market is not zero, and the paper shows the return comes from real investment including business investment. Finally, a balance approach to portfolio selection will be discussed using the symmetry rule in the accounting oriented general equilibrium model.