Microfoundations

Review of Political Economy 28(1):134-152, 2016

21 Pages Posted: 3 Jun 2015 Last revised: 22 Oct 2017

See all articles by Andy Denis

Andy Denis

City, University of London

Date Written: January 2, 2016

Abstract

The paper argues that the microfoundations programme can be understood as an implementation of an underlying methodological principle, methodological individualism, and that it therefore shares a fundamental ambiguity with that principle, viz, whether the macro must be derived from and therefore reducible to, or rather consistent with micro-level behaviours. The pluralist conclusion of the paper is not that research guided by the principle of microfoundations is necessarily wrong, but that the exclusion of approaches not guided by that principle is indeed necessarily wrong. The argument is made via an examination of the advantages claimed for dynamic stochastic general equilibrium models, the relationship between parts and wholes in social science, and the concepts of reduction, substrate neutrality, the intentional stance, and hypostatisation.

Keywords: microfoundations, methodological individualism, DSGE, substrate neutrality, intentional stance

JEL Classification: B41, B22

Suggested Citation

Denis, Andy, Microfoundations (January 2, 2016). Review of Political Economy 28(1):134-152, 2016, Available at SSRN: https://ssrn.com/abstract=2613491 or http://dx.doi.org/10.2139/ssrn.2613491

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