Idealizing Reduction: The Microfoundations of Macroeconomics
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The dominant view among macroeconomists is that macroeconomics reduces to microeconomics, both in the sense that all macroeconomic phenomena arise out of microeconomic phenomena and in the sense that macroeconomic theory-to the extent that it is correct-can be derived from microeconomic theory. More than that, the dominant view believes that macroeconomics should in practice use the reduced microeconomic theory: this is the program of microfoundations for macroeconomics to which the vast majority of macroeconomists adhere. The "microfoundational" models that they actually employ are, however, characterized by another feature: they are highly idealized, even when they are applied as direct characterizations of actual data, which itself consists of macroeconomic aggregates. This paper explores the interrelationship between reductionism and idealization in the microfoundational program and the role of idealization in empirical modeling. © 2010 The Author(s).
Published Version (Please cite this version)10.1007/s10670-010-9235-1
Publication InfoHoover, KD (2010). Idealizing Reduction: The Microfoundations of Macroeconomics. Erkenntnis, 73(3). pp. 329-347. 10.1007/s10670-010-9235-1. Retrieved from https://hdl.handle.net/10161/2043.
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Professor of Economics
Professor Hoover's research interests include macroeconomics, monetary economics, the history of economics, and the philosophy and methodology of empirical economics. His recent work in economics has focused on the application of causal search methodologies for structural vector autoregression, the history of microfoundational programs in macroeconomics, and Roy Harrod's early work on dynamic macroeconomics. In philosophy, he has concentrated on issues related to causality, especially in economi