What restrictions does macroeconomy have?
microeconomic foundation of macroeconomic theory
1. Term: The microeconomic foundation of macroeconomic theory means the direct derivation of macroeconomic behavioral equations from the microeconomic (i.e. microeconomic) maximization behavior (utility maximization of households, profit maximization of the company). Often an analogy is postulated between microeconomic and macroeconomic behavioral equations (e.g. real wage-dependent labor demand function) in order to circumvent the generally unsolvable aggregation problem. The macroeconomic behavioral hypotheses derived from the utility or profit maximization principle have a microeconomic or decision-logic foundation.
Macroeconomic behavioral hypotheses that cannot be justified with the microeconomic rational principle, such as the consumption function C = C (Y) (psychological law), which goes back to Keynes (1936), represent so-called ad hoc hypotheses Clower has shown in the context of his dual decision hypothesis - derive from limited optimization approaches if the household's utility maximization approach takes into account restrictions on the labor market (Neo-Keynesian theory)
2. Use: The New Macroeconomics, which includes the New Classical Macroeconomics, the New Keynesianism (New Keynesian Macroeconomics) and the New Macroeconomics of Open Economies, is predominantly characterized by macroeconomic models that have a complete microeconomic foundation. A distinction must be made between agent-based approaches (agent-based computational economics), which loosen the strict rationality and homogeneity assumptions of microfounded macroeconomics (such as the transition from rational to limited-rational expectations) and are more strongly based on behavioral economics.
See the corresponding focus article on macroeconomics.
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