Thursday, December 19, 2013


A discussion of microfoundations with Stephen Williamson: New Monetarist Economics: Microfoundations:

 "I've never much liked the word "microfoundations," which comes from the title of the Phelps volume. When the Phelps volume came out in 1970, micro and macro looked like they came from people living on different planets, and you had to convince people that it made sense to take ideas from Mars and use them on Venus. We know better now, of course, and economics is one unified whole. People who call themselves macroeconomists make liberal use of game theory, mechanism design, information theory, optimal growth theory, etc., etc. Solid economists worked all that stuff out for us to use, and it would be wasteful to leave it on the shelf."

and a reply by Nick Rowe
Microfoundsations that we like vs microfoundations that we can solve

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