  This paper presents hydrodynamic-like model of business cycles aggregate
fluctuations of economic and financial variables. We model macroeconomics as
ensemble of economic agents on economic space and agent's risk ratings play
role of their coordinates. Sum of economic variables of agents with coordinate
x define macroeconomic variables as functions of time and coordinates x. We
describe evolution and interactions between macro variables on economic space
by hydrodynamic-like equations. Integral of macro variables over economic space
defines aggregate economic or financial variables as functions of time t only.
Hydrodynamic-like equations define fluctuations of aggregate variables. Motion
of agents from low risk to high risk area and back define the origin for
repeated fluctuations of aggregate variables. Economic or financial variables
on economic space may define statistical moments like mean risk, mean square
risk and higher. Fluctuations of statistical moments describe phases of
financial and economic cycles. As example we present a simple model relations
between Assets and Revenue-on-Assets and derive hydrodynamic-like equations
that describe evolution and interaction between these variables.
Hydrodynamic-like equations permit derive systems of ordinary differential
equations that describe fluctuations of aggregate Assets, Assets mean risks and
Assets mean square risks. Our approach allows describe business cycle aggregate
fluctuations induced by interactions between any number of economic or
financial variables.
