Transforming Modern Macroeconomics
Exploring Disequilibrium Microfoundations, 1956–2003

This book tells the story of the search for disequilibrium micro-foundations for macroeconomic theory.

Roger E. Backhouse (Author), Mauro Boianovsky (Author)

9781107023192, Cambridge University Press

Hardback, published 12 November 2012

238 pages, 13 b/w illus.
23.1 x 15.5 x 1.8 cm, 0.45 kg

'… this is a very nice book written by two specialists on the history of macroeconomics, and one that brings to the fore a crucial development that transformed the area: the disequilibrium literature.' Pedro Garcia Duarte, Journal of the History of Economic Thought

This book tells the story of the search for disequilibrium micro-foundations for macroeconomic theory, from the disequilibrium theories of Patinkin, Clower and Leijonhufvud to recent dynamic stochastic general equilibrium models with imperfect competition. Placing this search against the background of wider developments in macroeconomics, the authors contend that this was never a single research program, but involved economists with very different aims who developed the basic ideas about quantity constraints, spillover effects and coordination failures in different ways. The authors contrast this with the equilibrium, market-clearing approach of Phelps and Lucas, arguing that equilibrium theories simply assumed away the problems that had motivated the disequilibrium literature. Although market-clearing models came to dominate macroeconomics, disequilibrium theories never went away and continue to exert an important influence on the subject. Although this book focuses on one strand in modern macroeconomics, it is crucial to understanding the origins of modern macroeconomic theory.

1. Introduction
2. Macroeconomics after Keynes
3. Don Patinkin and the neoclassical synthesis
4. Clower, Leijonhufvud and the re-appraisal of Keynesian economics
5. Macroeconomics with slow price adjustment
6. 'Equilibrium' microfoundations
7. General equilibrium and imperfect competition
8. Microeconomics and macroeconomics
9. After the 1970s
10. Conclusions
Bibliography.

Subject Areas: Economic history [KCZ], Monetary economics [KCBM], Macroeconomics [KCB]