Why Are the Standard Microfoundations Wrong?

Hiroshi Yoshikawa ()
Additional contact information
Hiroshi Yoshikawa: University of Tokyo

Chapter Chapter 1 in Reconstruction of Macroeconomics: Methods of Statistical Physics, and Keynes' Principle of Effective Demand, 2022, pp 1-27 from Springer

Abstract: Abstract Chapter 1 explains why standard microfoundations are wrong. Modern microfounded macroeconomics rests on representative agent assumptions. Some models, such as the Lucas rational expectations model, labor search theory and recent mean field game, assume apparently heterogeneous agents. However, in these models, economic agents differ only to the extent that realizations of relevant stochastic variables are different. They are assumed to share a common stochastic distribution with which they optimize. As such, standard microfounded macro models are stochastic versions of representative agent models. Real micro shocks are fundamentally different. They make micro optimization exercises meaningless.

Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:advchp:978-981-19-5264-7_1

Ordering information: This item can be ordered from
http://www.springer.com/9789811952647

DOI: 10.1007/978-981-19-5264-7_1

Access Statistics for this chapter

More chapters in Advances in Japanese Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().