Posted by: David Comerford | March 4, 2012

Microfoundations in macroeconomics

There’s been a few good posts on microfoundations in macro over the past couple of days:

Microfounded and other useful models

“Microfounded and other useful models”

The microfoundation thing

Modern macroeconomic methodology

Why bother with microfoundations

Economic models and economic predictions

Microfoundations and the speed of model development

Why Macro is hard (Taylor/Krugman edition)

Economics in the Crisis

The microeconomic foundations of macroeconomics

Microfoundations, micro payoffs (wonkish)

Microfoundations and central banks

as well as:

New old Keynesians and the paper I linked to before Are macroeconomic methods politically biased


Noah Smith summarises:

“More Microfoundations Madness!
1a) Simon Wren-Lewis has more thoughts on microfoundations and when they have proven useful in the past.
1b) Angus of Kids Prefer Cheese says that current models basically give you the choice between using crappy microfoundations (RBC) or incomplete microfoundations (New Keynesian models). Peter Dorman  I pretty much agree with all of these posts.
1c) Peter Dorman points out that even if you have good microfoundations, aggregation poses a daunting problem for macro models. Richard Serlin makes similar points.
1d) Peter Dorman and Andrew Gelman are even more critical of existing micro models than I am.”

& concludes: Did the Krugman insurgency fail?


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