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http://ssrn.com/abstract=1139918
 
 

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Idealizing Reduction: The Microfoundations of Macroeconomics


Kevin D. Hoover


Duke University - Departments of Economics and Philosophy

27 May 2008


Abstract:     
The dominant view among macroeconomists is that macroeconomics reduces to microeconomics - both in the sense that all macroeconomic phenomena arise out of microeconomic phenomena and in the sense that macroeconomic theory - to the extent that it is correct - can be derived from microeconomic theory. More than that the dominant view believes that macroeconomics should in practice used the reduced microeconomic theory: this is the program of microfoundations for macroeconomics to which the vast majority of macroeconomists adhere. The "microfoundational" models that they actually employ are, however, characterized by another feature: they are highly idealized, even when they are applied as direct characterizations of actual data, which itself consists of macroeconomic aggregates. This paper explores the interrelationship between reductionism and idealization in the microfoundational program and the role of idealization in empirical modeling.

Number of Pages in PDF File: 32

Keywords: idealization, reductionism, microfoundations of macroeconomics, macroeconomics, microeconomics, modeling

JEL Classification: B41, E10

working papers series


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Date posted: June 3, 2008  

Suggested Citation

Hoover, Kevin D., Idealizing Reduction: The Microfoundations of Macroeconomics (27 May 2008). Available at SSRN: http://ssrn.com/abstract=1139918 or http://dx.doi.org/10.2139/ssrn.1139918

Contact Information

Kevin D. Hoover (Contact Author)
Duke University - Departments of Economics and Philosophy ( email )
Durham, NC 27708-0204
United States
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