Saturday, March 3, 2012

Noah Smith — Why bother with microfoundations in macro?


Read it at Noahpinion
Why bother with microfoundations?
by Noah Smith

The problem with present microfoundations is that they are based on simplistic models of human action derived from a superficial understanding of behaviorism when psychology and the social sciences have moved beyond this simplistic view of human nature and beyond behaviorism as the dominant model. Economics needs to catch up, which means that economists need to come out of their closets and get out more.

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