Abstract
The lack of clear connection between macroeconomics and microeconomics has long been a source of discontent among economists. Arrow (1967) called it a ‘major scandal’ that neoclassical price theory cannot account for such macroeconomic phenomena as unemployment. Lucas and Sargent (1979) argued that Keynesian macroeconomics is ‘fundamentally flawed’ by its lack of a firm microfoundation. Countless students and practitioners alike have complained of the schizophrenic nature of a discipline whose two major branches project such radically different views of the world.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Arrow, K.J. 1959. Towards a theory of price adjustment. In The allocation of economic resources, ed. M. Abramovitz et al. Stanford: Stanford University Press.
Arrow, K.J. 1967. Samuelson collected. Journal of Political Economy 75(October): 730–737.
Barro, R.J., and H.I. Grossman. 1971. A general disequilibrium model of income and employment. American Economic Review 61(1): 82–93.
Clower, R.W. 1965. The Keynesian counter-revolution: A theoretical appraisal. In The theory of interest rates, ed. F.H. Hahn and F.P.R. Brechling. London: Macmillan.
Diamond, P.A. 1982. Aggregate demand management in search equilibrium. Journal of Political Economy 90(5): 881–894.
Hicks, J.R. 1937. Mr Keynes and the ‘classics’: A suggested Interpretation. Econometrica 5(April): 147–159.
Howitt, P. 1985. Transaction costs in the theory of unemployment. American Economic Review 75(1): 88–100.
Lucas, R.E. 1972. Expectations and the neutrality of money. Journal of Economic Theory 4(2): 103–124.
Lucas, R.E., and T.J. Sargent. 1979. After Keynesian macroeconomics. Federal Reserve Bank of Minneapolis Quarterly Review 3(2): 1–16.
Modigliani, F. 1944. Liquidity preference and the theory of interest and money. Econometrica 12(January): 45–88.
Patinkin, D. 1956. Money, interest, and prices. New York: Harper & Row.
Phelps, E.S., et al. (eds.). 1970. Microeconomic foundations of employment and inflation theory. New York: Norton.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Howitt, P. (2018). Macroeconomics: Relations with Microeconomics. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_691
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_691
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences