IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v19y1993i4p447-457.html
   My bibliography  Save this article

The Macrofoundations of Micro

Author

Listed:
  • David C. Colander

    (Middlebury College)

Abstract

This paper argues that there are two contending visions of macroeconomics: the micro vision--in which macroeconomics results are just the combination of results of atomistic individuals, and the macro vision--in which the interaction of atomistic individuals leads to such complexity that the aggregate results cannot be rationally deduced from the analysis of individual atomistic individuals. Using a macro vision, the economy cannot be analyzed contextually taking into account the constraints imposed on individuals by the macro institutions necessary to coordinate individuals behavior sufficiently so that markets can work. This macro foundation to micro approach offers a serious challenge to New Classical economics that other approaches to Keynesian macro do not.

Suggested Citation

  • David C. Colander, 1993. "The Macrofoundations of Micro," Eastern Economic Journal, Eastern Economic Association, vol. 19(4), pages 447-457, Fall.
    • Handle: RePEc:eej:eeconj:v:19:y:1993:i:4:p:447-457
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume19/V19N4P447_457.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Howitt, Peter, 1985. "Transaction Costs in the Theory of Unemployment," American Economic Review, American Economic Association, vol. 75(1), pages 88-100, March.
    2. Sargent, Thomas J. & Wallace, Neil, 1976. "Rational expectations and the theory of economic policy," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 169-183, April.
    3. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    4. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    5. Woodford, Michael, 1986. "Stationary sunspot equilibria in a finance constrained economy," Journal of Economic Theory, Elsevier, vol. 40(1), pages 128-137, October.
    6. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dieter Bögenhold, 2013. "Social Network Analysis and the Sociology of Economics: Filling a Blind Spot with the Idea of Social Embeddedness," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(2), pages 293-318, April.
    2. Alan G. Isaac, 2019. "Exploring the Social-Architecture Model," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(4), pages 565-589, October.
    3. David Colander, 1995. "The Stories We Tell: A Reconsideration of AS/AD Analysis," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 169-188, Summer.
    4. Daniel G. Arce M., 1996. "Social Norms, Inflation And Stabilization," Rationality and Society, , vol. 8(3), pages 277-294, August.
    5. Bartolini, Stefano & Bonatti, Luigi, 2002. "Environmental and social degradation as the engine of economic growth," Ecological Economics, Elsevier, vol. 43(1), pages 1-16, November.
    6. Hammersland, Roger & Træe, Cathrine Bolstad, 2014. "The financial accelerator and the real economy: A small macroeconometric model for Norway with financial frictions," Economic Modelling, Elsevier, vol. 36(C), pages 517-537.
    7. Elke Muchlinski, 2005. "The Lucas Critique and Keynes Response.Considering the History of Macroeconomics," Macroeconomics 0503019, University Library of Munich, Germany.
    8. Roger Hammersland & Cathrine Bolstad Træe, 2011. "The Financial Accelerator and the real economy. Self-reinforcing feedback loops in a core macro econometric model for Norway," Discussion Papers 668, Statistics Norway, Research Department.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hugo Benítez-Silva & Debra Dwyer & Wayne-Roy Gayle & Thomas Muench, 2008. "Expectations in micro data: rationality revisited," Empirical Economics, Springer, vol. 34(2), pages 381-416, March.
    2. Hugo Benítez-Silva & Debra S. Dwyer, 2003. "What to Expect when you are Expecting Rationality: Testing Rational Expectations using Micro Data," Working Papers wp037, University of Michigan, Michigan Retirement Research Center.
    3. Kevin D. Hoover & Òscar Jordà, 2001. "Measuring systematic monetary policy," Review, Federal Reserve Bank of St. Louis, vol. 83(Jul), pages 113-144.
    4. Patricia Bonini, 2004. "New Macroeconomics and Credibility Analysis," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 5(2), pages 341-359.
    5. Kevin D. Hoover, 2012. "Microfoundational Programs," Chapters, in: Microfoundations Reconsidered, chapter 1, Edward Elgar Publishing.
    6. Stephen J. Turnovsky, 2019. "Trends and fads in macroeconomic dynamics," Indian Economic Review, Springer, vol. 54(1), pages 179-197, December.
    7. Lévesque, Suzanne & Paquin, Lloyd, 1986. "Les microfondements de la macroéconomique : une recension critique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 62(4), pages 597-619, décembre.
    8. Giuseppe Pernagallo & Benedetto Torrisi, 2020. "A theory of information overload applied to perfectly efficient financial markets," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 14(2), pages 223-236, October.
    9. Benitez-Silva, Hugo & Dwyer, Debra S., 2006. "Expectation formation of older married couples and the rational expectations hypothesis," Labour Economics, Elsevier, vol. 13(2), pages 191-218, April.
    10. Benjamin M. Friedman, 1980. "Survey Evidence on The Rationality of Interest Rate Expectations," NBER Working Papers 0261, National Bureau of Economic Research, Inc.
    11. Pierre Fortin, 2003. "Keynes resurrected," Cahiers de recherche du Département des sciences économiques, UQAM 20-21, Université du Québec à Montréal, Département des sciences économiques.
    12. Walter, Timo, 2019. "Janus Face of Inflation Targeting_Walter_PrePrint," OSF Preprints 9fmhe, Center for Open Science.
    13. Lu Zhang, 2017. "The Investment CAPM," European Financial Management, European Financial Management Association, vol. 23(4), pages 545-603, September.
    14. Lu Zhang, 2019. "Q-factors and Investment CAPM," NBER Working Papers 26538, National Bureau of Economic Research, Inc.
    15. Monique Reid & Pierre Siklos, 2023. "Rationality and biases insights from disaggregated firm level inflation expectations data," Working Papers 11050, South African Reserve Bank.
    16. Marco A. Espinosa-Vega & Steven Russell, 1998. "The long-run real effects of monetary policy: Keynesian predictions from a neoclassical model," FRB Atlanta Working Paper 98-6, Federal Reserve Bank of Atlanta.
    17. Solomon Sorin & Golo Natasa, 2013. "Minsky Financial Instability, Interscale Feedback, Percolation and Marshall–Walras Disequilibrium," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 167-260, October.
    18. Michelle Baddeley, 2019. "Behavioural Macroeconomic Policy: New perspectives on time inconsistency," Papers 1907.07858, arXiv.org.
    19. Choudhary, M. Ali & Michael Orszag, J., 2008. "A cobweb model with local externalities," Journal of Economic Dynamics and Control, Elsevier, vol. 32(3), pages 821-847, March.
    20. Committee, Nobel Prize, 2011. "Thomas J. Sargent and Christopher A. Sims: Empirical Macroeconomics," Nobel Prize in Economics documents 2011-2, Nobel Prize Committee.

    More about this item

    Keywords

    Macroeconomics;

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:19:y:1993:i:4:p:447-457. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Matheson, College of the Holy Cross (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa1ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.