Macro vs. Micro: Rethinking Economic Foundations Could Shape Future Policies
Mainstream economists believe that macroeconomic models should be based on microfoundations, going beyond simple supply and demand functions. The idea is that microeconomics comes before macroeconomics. The traditional view traces the origins of this approach back to the work of Lucas and his colleagues in the 1970s. However, this article challenges this standard narrative and reexamines the history of the relationship between microeconomics and macroeconomics.