Most pertinent piece on the interdependence of micro and macro, extending the critique of micro foundations in macro…
A few weeks ago, I posted a somewhat critical review of Kartik Athreya’s new book Big Ideas in Macroeconomics. In quoting a passage from chapter 4 in which Kartik defended the rational-expectations axiom on the grounds that it protects the public from economists who, if left unconstrained by the discipline of rational expectations, could use expectational assumptions to generate whatever results they wanted, I suggested that this sort of reasoning in defense of the rational-expectations axiom betrayed what I called the “methodological arrogance” of modern macroeconomics which has, to a large extent, succeeded in imposing that axiom on all macroeconomic models. In his comment responding to my criticisms, Kartik made good-natured reference in passing to my charge of “methodological arrogance,” without substantively engaging with the charge. And in a post about the early reviews of Kartik’s book, Steve Williamson, while crediting me for at least reading the book before…
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