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Heterodox microeconomics and the foundation of heterodox macroeconomics

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  • Lee, Frederic

Abstract

The resolution of the controversy over the microfoundations of macroeconomics is important to heterodox economics. In this essay, I argue that the controversy is due to misspecification. That is, the conventional understanding of the controversy is that it is a reductionist exercise of macroeconomics to mainstream microeconomics. However, mainstream microeconomics is theoretically incoherent and hence cannot provide the microfoundations for any macroeconomics, mainstream or heterodox. In addition, a common position in heterodox economics is that heterodox macroeconomics generates a mainstream microeconomics sub-structure. But it is argued that this is not the case; rather it generates a heterodox microeconomics substructure. The essay concludes with the argument that in heterodox economics the micro-macro dichotomy does not exist and hence the controversy should be dismissed.

Suggested Citation

  • Lee, Frederic, 2011. "Heterodox microeconomics and the foundation of heterodox macroeconomics," MPRA Paper 30491, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:30491
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    File URL: https://mpra.ub.uni-muenchen.de/30491/1/MPRA_paper_30491.pdf
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    References listed on IDEAS

    as
    1. Lee, Frederic, 2011. "Old controversy revisited: pricing, market structure, and competition," MPRA Paper 30490, University Library of Munich, Germany.
    2. Tae‐Hee Jo, 2011. "Social Provisioning Process and Socio‐Economic Modeling," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(5), pages 1094-1116, November.
    3. Lee, Frederic, 2011. "Heterodox surplus approach: production, prices, and value theory," MPRA Paper 31824, University Library of Munich, Germany.
    4. Lee, Frederic & Jo, Tae-Hee, 2010. "Heterodox production and cost theory of the business enterprise," MPRA Paper 27635, University Library of Munich, Germany.
    5. Rizvi, S Abu Turab, 1994. "The Microfoundations Project in General Equilibrium Theory," Cambridge Journal of Economics, Oxford University Press, vol. 18(4), pages 357-377, August.
    6. Frederic Lee & Steve Keen, 2004. "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory," Review of Social Economy, Taylor & Francis Journals, vol. 62(2), pages 169-199.
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    Cited by:

    1. Jo, Tae-Hee, 2012. "Financing investment under fundamental uncertainty and instability: A heterodox microeconomic view," MPRA Paper 39450, University Library of Munich, Germany.

    More about this item

    Keywords

    Heterodox; Microeconomics; Macroeconomics;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches

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