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Whither the Microeconomic Foundations of Macroeconomic Theory ?

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  • Wim Meeusen

Abstract

The debate on the future of macroeconomic theory is in full swing. Uneasiness about mainstream macroeconomics, and more in particular the ubiquitous DSGE line of research, could already be heard in some circles well before the Credit Crunch and the ensuing economic crisis. This paper argues that the present-day strand of micro-foundations of macroeconomics are the main source of failure of the latter. In section 1 we trace back the history of the call for micro-foundations. Section 2 examines these micro-foundations in more detail. Section 3 deals with the economic crisis and the crisis in (macro)economic theory. In section 4 we try to identify possible alternative approaches and paradigms. We conclude in section 5.

Suggested Citation

  • Wim Meeusen, 2011. "Whither the Microeconomic Foundations of Macroeconomic Theory ?," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(1), pages 51-80.
  • Handle: RePEc:bxr:bxrceb:2013/93449
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    Cited by:

    1. Senbeta, Sisay, 2011. "How applicable are the new keynesian DSGE models to a typical low-income economy?," MPRA Paper 30931, University Library of Munich, Germany.

    More about this item

    Keywords

    Micro-foundations; DSGE models; Economic-financial crisis;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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