The Mathematization of Macroeconomics. A Recursive Revolution

Kumaraswamy Vela Velupillai

Economia politica, 2008, issue 2, 283-316

Abstract: Frank Ramsey's classic framing of the dynamics of optimal savings, [44] as one to be solved as a problem in the calculus of variations and Ragnar Frisch's imaginative invoking of a felicitous Wicksellian metaphor to provide the impulse-propagation dichotomy, in a stochastic dynamic framework, for the tackling the problem of business cycles [13], have come to be considered the twin fountainheads of the mathematization of macroeconomics in its dynamic modes − at least in one dominant tradition. The intertemporal optimization framework of a rational agent, viewed as a signal processor, facing the impulses that are propagated through the mechanisms of a real economy, provide the underpinnings of the stochastic dynamic general equilibrium (SDGE) model that has become the benchmark and frontier of current macroeconomics. In this paper, on the 80th anniversary of Ramsey's classic and the 75th anniversary of Frisch's Cassel Festschrift contribution, an attempt is made to characterize the mathematization of macroeconomics in terms of the frontier dominance of recursive methods. There are, of course, other - probably more enlightened − ways to tell this fascinating story. However, although my preferred method would have been to tell it as an evolutionary development, since I am not sure that where we are represents progress, from where we were, say 60 years ago, I have chosen refuge in some Whig fantasies.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.rivisteweb.it/download/article/10.1428/27395 (application/pdf)
https://www.rivisteweb.it/doi/10.1428/27395 (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mul:jb33yl:doi:10.1428/27395:y:2008:i:2:p:283-316

Access Statistics for this article

Economia politica is currently edited by Alberto Quadrio Curzio, Giorgio Lunghini, Pier Carlo Nicola

More articles in Economia politica from Società editrice il Mulino
Bibliographic data for series maintained by ().