Assumptions in Macroeconomics

Physics models can have a wide variety of different simplifying assumptions.  Models in some areas will include a full description of relativistic behaviour, while others will not.  Some models describe objects based on the quantum mechanical interactions between particles, some treat gas molecules as essentially point particles that don’t interact.  These different models and differentContinue reading “Assumptions in Macroeconomics”

Do Microfoundations address the Lucas Critique?

Modern macroeconomics has been endlessly criticized, not only by critics of mainstream economics, but also by many prominent mainstream economists. For example, nobel price winners such as Paul Romer, Paul Krugman, and Joseph Stiglitz have written articles in which they disparage modern macroeconomists. Even economists who have been very involved with such models such asContinue reading “Do Microfoundations address the Lucas Critique?”