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| Title: | | Implicit Microfoundations for Macroeconomics  |
| Authors: | | Wright, Ian |
| Issue Date: | | 2008 |
| Series/Report no.: | | Economics Discussion Papers / Institut für Weltwirtschaft 2008-41 |
| Abstract: | | 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. |
| Subjects: | | Micro foundations macroeconomics aggregation power laws |
| JEL: | | E11 P16 D50 C63 B41 A12 |
| Creative Commons License: | |  |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers
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