Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/27477 
Authors: 
Year of Publication: 
2008
Series/Report no.: 
Economics Discussion Papers No. 2008-41
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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: 
cc-by-nc Logo
Document Type: 
Working Paper

Files in This Item:
File
Size
935.72 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.