What kind of microfoundations? Notes on the evolutionary approach

Mario Cimoli and Gabriel Porcile ()

Desarrollo Productivo from Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL)

Abstract: The microfoundations of economic models are a hotly debated topic in the literature. The debate is important because microfoundations —the ways in which agents decide and behave— have implications that go beyond a specific firm, market or activity; they strongly condition macroeconomic outcomes. This document addresses the classical problems of rationality, uncertainty and institutions: when there is Keynes-Knight uncertainty and rationality is bounded, decision making adopts the form of conventional rules or heuristics. The hyper-rational representative agent of the rational expectations world could generate highly misleading outcomes in macro models. Section 2 applies this discussion to the study of technical change and to innovation and diffusion of technology in the international system, which transform the patterns of specialization. Section 3 discusses the forces that may trap a country in a low-growth trap and the crucial role of institutions in escaping from this trap.

Date: 2015-01
New Economics Papers: this item is included in nep-evo, nep-hme, nep-hpe, nep-ino and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col026:37758

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