Sunday, January 20, 2008

Hoisted from Comments- Logic of Micro and Macro

Hoisted from comments to a Peter Boettke post- Mario Rizzo writes;
Perhaps I am wrong but it seems to me that all of the popular books that stress the economic rationality of various kinds of human behavior are, broadly speaking, microeconomics books. When it comes to macroeconomics, the popular literature and most of the scholarly literature emphasizes the collective irrationality of individual behavior -- for example, people lose confidence in the macro environment and then slow down their spending thus making matters worse, etc. What does this separation or dichotomy imply? We are rational in the small and irrational in the large? This is a first-class mess.

1 comment:

Gabriel M. said...

Oh come on! Someone should send them a copy of something printed after the '70s!

Is Sargent&Ljunqvist's Advanced Macro actually micro? How about Barro's textbook?