Journal Article

No. 2009-19 | May 11, 2009
Implicit Microfoundations for Macroeconomics PDF Icon
(Published in Special Issue Reconstructing Macroeconomics)

Abstract

A large market economy has a huge number of degrees of freedom with weak micro-level coordination. The "implicit microfoundations" approach considers this property of micro-level interactions to more strongly determine macro-level outcomes compared to the precise details of individual choice behavior; that is, the "particle" nature of individuals dominates their "mechanical" nature. So rather than taking an "explicit microfoundations" approach, in which individuals are represented as "white-box" sources of fully-specified optimizing behavior ("rational agents"), we instead represent individuals as "black box" sources of unpredictable noise subject to objective constraints ("zero-intelligence agents"). To illustrate the potential of the approach we examine a parsimonious, agent-based macroeconomic model with implicit microfoundations. It generates many of the reported empirical distributions of capitalist economies, including the distribution of income, firm sizes, firm growth, GDP and recessions.

Data Set

Data sets for articles published in "Economics" are available at Dataverse. Please have a look at our repository.

The data set for this article can be found at: http://hdl.handle.net/1902.1/13762

JEL Classification

A12 B41 C63 D50 E11 P16

Citation

Ian Wright (2009). Implicit Microfoundations for Macroeconomics. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 3, 2009-19. http://dx.doi.org/10.5018/economics-ejournal.ja.2009-19

Assessment

Downloads: 3864 (Journalarticle: 2570, Discussionpaper: 1294)
Citations (@RePEc): 4
external link Search this article at Google Scholar



Comments and Questions