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Macro Needs Micro

Author

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  • Ghironi, Fabio

Abstract

An emerging consensus on the future of macroeconomics views the incorporation of a role for financial intermediation, labor market frictions, and household heterogeneity in the presence of uninsurable unemployment risk as key needed extensions to the benchmark macro framework. I argue that this is welcome, but not sufficient for macro---and international macro---to tackle the menu of issues that have been facing policymakers since the recent global crisis. For this purpose, macro needs more micro than the benchmark setup has been incorporating so far. Specifically, artificial separations between business cycle analysis, the study of stabilization policies, and growth macro, as well as between international macroeconomics and international trade, must be overcome. I review selected literature contributions that took steps in this direction; outline a number of important, promising directions for future research; and discuss methodological issues in the development of this agenda.

Suggested Citation

  • Ghironi, Fabio, 2017. "Macro Needs Micro," CEPR Discussion Papers 12299, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12299
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    Cited by:

    1. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95, May.
    2. Gulan, Adam, 2018. "Paradise lost? A brief history of DSGE macroeconomics," Bank of Finland Research Discussion Papers 22/2018, Bank of Finland.
    3. Dan Costin NIŢESCU & Florin Alexandru DUNA, 2018. "A Multifactorial Analysis of Bank Liquidity in the Euro Area," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 153-167, September.
    4. Ferry Syarifuddin & Toni Bakhtiar, 2022. "The Macroeconomic Effects of an Interest-Bearing CBDC: A DSGE Model," Mathematics, MDPI, vol. 10(10), pages 1-33, May.
    5. Basile Grassi & Julien Sauvagnat, 2019. "Production networks and economic policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 35(4), pages 638-677.
    6. Gulan, Adam, 2018. "Paradise lost? A brief history of DSGE macroeconomics," Research Discussion Papers 22/2018, Bank of Finland.
    7. Mazzoli, Marco & Lombardini, Simone, 2021. "Business cycle in an oligopolistic economy with entry and exit," Journal of Macroeconomics, Elsevier, vol. 69(C).
    8. Etro, Federico, 2017. "Research in economics and monopolistic competition," Research in Economics, Elsevier, vol. 71(4), pages 645-649.
    9. Luca Fontanelli, 2023. "Theories of market selection: a survey," LEM Papers Series 2023/22, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Federico Etro, 2018. "Macroeconomics with Endogenous Markups and Optimal Taxation," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 378-406, October.
    11. Andrew G. Haldane & Arthur E. Turrell, 2019. "Drawing on different disciplines: macroeconomic agent-based models," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 39-66, March.
    12. Jesper Lindé, 2018. "DSGE models: still useful in policy analysis?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 34(1-2), pages 269-286.

    More about this item

    Keywords

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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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