Question from Past Macroeconomics Qualifying Exam (Fall, 2003 - Question one) at George Mason UniversityEdit
Most macroeconomists now acknowledge the importance of grounding macroeconomic theory on sound microeconomic foundations. The history of economic thought offers two broad desiderata for those foundations.
- One is the rational choice notion that people have intentions and pursue plans.
- The other is the notion that interaction among individuals, whether cooperative or competitive, generates unintended consequences.
Categorize and evaluate the various approaches to macroeconomic theorizing in terms of these two broad desiderata.
The Keynesians are likely to be under the second. This would also include the neoclassical synthesis. Basically any paradigm which has a special fear of the market outcome would be more likely to coincide with this 2nd desiderata. I would place the Moneterists with the first desiderata because of the use of rules to constrain planning in their paradigm. When plans fail, it tends to be systematic. The Austrians, the rational choice thoeorists and all kinds of Classical Economists seem to think of the individual as capable if not always pursuing purposeful action.
- Unintended consequences:
- New Keynesians
- Rational Choice / Planners
- New Classicals
- Real Business Cycle theory