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Pluralism, the Lucas critique, and the integration of macro and micro

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  • Peter Skott

    () (University of Massachusetts Amherst)

Abstract

Mainstream 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

Suggested Citation

  • Peter Skott, 2012. "Pluralism, the Lucas critique, and the integration of macro and micro," UMASS Amherst Economics Working Papers 2012-04, University of Massachusetts Amherst, Department of Economics.
  • Handle: RePEc:ums:papers:2012-04
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    References listed on IDEAS

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    1. Peter Skott, 2012. "Theoretical And Empirical Shortcomings Of The Kaleckian Investment Function," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 109-138, February.
    2. Marc Lavoie & Gabriel Rodriguez & Mario Seccareccia, 2004. "Similitudes and Discrepancies in Post-Keynesian and Marxist Theories of Investment: A Theoretical and Empirical Investigation," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(2), pages 127-149.
    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. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Oxford University Press, vol. 35(3), pages 587-612.
    5. Freeman, Alan & Kliman, Andrew, 2005. "Beyond talking the talk: towards a critical pluralist practice," MPRA Paper 48644, University Library of Munich, Germany, revised 07 Nov 2006.
    6. Amitava Krishna Dutt, 2003. "On Post Walrasian Economics, Macroeconomic Policy, and Heterodox Economics," International Journal of Political Economy, Taylor & Francis Journals, vol. 33(2), pages 47-67.
    7. Peter Skott & Ben Zipperer, 2012. "An empirical evaluation of three post-Keynesian models," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 9(2), pages 277-307.
    8. Michalis Nikiforos, 2011. "On the Desired Rate of Capacity Utilization," Working Papers 1116, New School for Social Research, Department of Economics.
    9. John B. Davis, 2008. "The turn in recent economics and return of orthodoxy," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 349-366, May.
    10. Sheila C. Dow, 2007. "Variety Of Methodological Approach In Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 447-465, July.
    11. David Colander, 2003. "Post Walrasian Macroeconomics and Heterodoxy : Thinking Outside the Heterodox Box," International Journal of Political Economy, Taylor & Francis Journals, vol. 33(2), pages 68-81.
    12. G. D. N. Worswick, 1959. "Mrs. Robinson On Simple Accumulation A Comment With Algebra," Oxford Economic Papers, Oxford University Press, vol. 11(2), pages 125-142.
    13. Tony Lawson, 2009. "The current economic crisis: its nature and the course of academic economics," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 759-777, July.
    14. Chick, Victoria & Dow, Sheila C, 2001. "Formalism, Logic and Reality: A Keynesian Analysis," Cambridge Journal of Economics, Oxford University Press, vol. 25(6), pages 705-721, November.
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    Cited by:

    1. Peter Skott & Martin Rapetti & Arslan Razmi, 2012. "Real exchange rates and the long-run effects of aggregate demand in economies with underemployment," UMASS Amherst Economics Working Papers 2012-06, University of Massachusetts Amherst, Department of Economics.
    2. Schoder, Christian, 2017. "Are Dynamic Stochastic Disequilibrium models Keynesian or neoclassical?," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 46-63.
    3. Christian Schoder, 2015. "A Keynesian Dynamic Stochastic Labor-Market Disequilibrium model for business cycle analysis," IMK Working Paper 157-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Giuseppe Mastromatteo & Giuseppe Mastromatteo, 2016. "Minsky at Basel: A Global Cap to Build an Effective Postcrisis Banking Supervision Framework," Economics Working Paper Archive wp_875, Levy Economics Institute.

    More about this item

    Keywords

    micro foundations; pluralism; old Keynesian theory; Kaleckian investment function.;

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches

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