Heterodox microeconomics and the foundation of heterodox macroeconomics

The resolution of the controversy over the microfoundations of macroeconomics is important to heterodox economics. In this essay, I argue that the controversy is due to misspecification. That is, the conventional understanding of the controversy is that it is a reductionist exercise of macroeconomics to mainstream microeconomics. However, mainstream microeconomics is theoretically incoherent and hence cannot provide the microfoundations for any macroeconomics, mainstream or heterodox. In addition, a common position in heterodox economics is that heterodox macroeconomics generates a mainstream microeconomics sub-structure. But it is argued that this is not the case; rather it generates a heterodox microeconomics substructure. The essay concludes with the argument that in heterodox economics the micro-macro dichotomy does not exist and hence the controversy should be dismissed.Heterodox; Microeconomics; Macroeconomics

Game Theory and Economic Behavior

Until the beginning of 1950s, the economic theory in general, and the microeconomic theory in particular, relied totally on the deterministic character of economic phenomena. Nowadays microeconomic models are built on uncertain elements in a competitive environment that is affected by risk and uncertainty. Two centuries later, traditional microeconomics, also known as derived microeconomics, continues to be based on Adam Smith’s theory. As individuals are interested in participating in commercial transactions, but for these to take place effectively, two essential principles should be observed: the principle of rationality and the principle of pure and perfect competition. The link between Brower’ fixed point theorems on the one hand and John von Neumann’s minimax theorem on the other hand enabled other authors such as McKenzie Arrow and Debreu Uzawa to state and demonstrate simpler but more general theorems than that of Abraham Wald. It was thus supposed that consumer preferences in a pool of possible consumptions are reflexive, transitive and all are comparable. Using game theory as a reference framework to represent the behavior of economic agents, microeconomics strongly renews its scope of investigation. The problem that arises is no longer linked to the study of perfectly competitive markets, but mostly to how agents coordinate their decisions in different strategic configuration circumstances. The use of such concepts as risk, antiselection or coordination limits has opened new scopes to economy in general and to microeconomics in particular.Game Theory, behavior of economic, traditional microeconomics, new microeconomics

A microeconomic approach to estimating demand: the asymptotically ideal model

Microeconomics

Dynamic optimal factor demand under financial constraints

factor demand;microeconomics

Microstructure theory and the foreign exchange market

Foreign exchange ; Microeconomics

The economic explanation of the jump of the co-state variable

Price Theory;microeconomics

A price adjustment process for an economy with a block-diagonal pattern

Economics;Microeconomics

The diffusion of innovations: The influence of supply-side factors

Technological Change;microeconomics

Comment on 'microeconometric demand systems with binding non-negativity constraints: The dual approach'

Economics;Microeconomics

Bertrand-Edgeworth competition with sequential capacity choice

Duopoly;Capacity;microeconomics