Macroeconomics
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Macroeconomics is the economics sub-field of study that considers aggregate behavior, and the study of the sum of individual economic decisions. This is in contrast to microeconomics, the study of the economic behaviour of individual consumers, firms, and industries.
Macroeconomics can be used to analyze how best to influence government policy goals such as economic growth, price stability, full employment and the attainment of a sustainable balance of payments.
Origins
Until the 1930s most economic analysis did not separate out individual economics behavior from aggregate behavior. With the Great Depression of the 1930s, suffered throughout the developed world at the time, and the development of the concept of national income and product statistics, the field of macroeconomics began to expand. Particularly influential were the ideas of John Maynard Keynes, who formulated theories to try to explain the Great Depression. Before that time, comprehensive national accounts, as we know them today, did not exist .
One of the challenges of economics has been a struggle to reconcile macroeconomic and microeconomic models. Starting in the 1950s, macroeconomists developed micro-based models of macroeconomic behavior (such as the consumption function). Dutch economist Jan Tinbergen developed the first comprehensive national macroeconomic model, which he first built for the Netherlands and later applied to the United States and the United Kingdom after World War II. The first global macroeconomic model, Wharton Econometric Forecasting Associates LINK project, was initiated by Lawrence Klein and was mentioned in his citation for the Nobel Memorial Prize in Economics in 1980.
Theorists such as Robert Lucas Jr suggested (in the 1970s) that at least some traditional Keynesian (after British economist John Maynard Keynes) macroeconomic models were questionable as they were not derived from assumptions about individual behavior. However, New Keynesian macroeconomics has generally presented microeconomic models to shore up their macroeconomic theorizing, and some Keynesians have contested the idea that microeconomic foundations are essential, if the model is analytically useful.
The various schools of thought are not always in direct competition with one another -- even though they sometimes reach differing conclusions. Macroeconomics is an ever evolving area of research. The goal of economic research is not to be "right," but rather to be accurate. It is likely that none of the current schools of economic thought perfectly capture the workings of the economy. They do, however, each contribute a small piece of the overall puzzle. As one learns more about each school of thought, it is possible to combine aspects of each in order to reach an informed synthesis.
See also
Macroeconomic concepts:
- Adaptive expectations -- Balance of payments -- Central bank -- Currency -- Gold standard -- Gresham's Law -- Inflation -- IS/LM model -- Money -- Measures of national income and output -- Monetary policy -- National Income and Product Accounts -- Purchasing power parity -- Rational Expectations -- Reaganomics -- Recession -- Stockholm school -- Unemployment
- Austrian economics -- Keynesian economics -- Monetarism -- New classical economics -- New Keynesian economics -- Supply side economics -- Welfare economics
- Milton Friedman -- John Maynard Keynes -- Robert Lucas Jr -- Robert Mundell -- Finn E. Kydland -- Edward C. Prescott -- Thomas J. Sargent
- Development economics -- Economics -- Political economy -- List of economics topics -- List of economic geography topics -- List of international trade topics -- Important publications in macroeconomics
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