Pluralism, the Lucas critique, and the integration of macro and micro
AbstractMainstream macroeconomics has pursued .micro founded.models based on the explicit optimization by representative agents. The result has been a long and wasteful detour. But elements of the Lucas critique are relevant, also for heterodox economists. Challenging common heterodox views on microeconomics and formalization, this paper argues that (i) economic models should not be based purely on empirically observed regularities,(ii) heterodox economists must be able to tell an integrated story about goal-oriented micro behavior in a specific macro environment, and (iii)relatively simple analytical models have an essential role to play. JEL Categories: E1; B5
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Bibliographic InfoPaper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2012-04.
Date of creation: Feb 2012
Date of revision:
micro foundations; pluralism; old Keynesian theory; Kaleckian investment function.;
Find related papers by JEL classification:
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-14 (All new papers)
- NEP-EVO-2012-03-14 (Evolutionary Economics)
- NEP-HME-2012-03-14 (Heterodox Microeconomics)
- NEP-HPE-2012-03-14 (History & Philosophy of Economics)
- NEP-PKE-2012-03-14 (Post Keynesian Economics)
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