Resource title

Implicit Microfoundations for Macroeconomics

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Resource description

A large market economy has a huge number of degrees of freedom with weak microlevel coordination. The implicit microfoundations' approach assumes this property of micro-level interactions more strongly conditions 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.

Resource author

Ian Wright

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27477

Resource license

Adapt according to the presented license agreement and reference the original author.