Theory to the Rescue of the Macroeconometric Models: Edmond Malinvaud’s Alternative View on the Search for Microfoundations

• Published in: IDEAS Working Paper Series from RePEc
• Main Author: Renault, Matthieu
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2020
• DOI: 10.2139/ssrn.3434008

As a complement to Hoover (2012), I argue that the "General Equilibrium" (in particular, "the disequilibrium theory") and the "Aggregation" (i.e. large-scale models) microfoundational programs were in no way incompatible, while both opposed to New Classical Economics. In this regard, Malinvaud made this case while having committed to both programs from the 1970s on. His twofold commitment gave way to an alternative view on the search for microfoundations, which he regarded as subject to conditions and of limited impact on the autonomy of macroeconomics. More importantly, the search for microfoundations should be connected and oriented towards the needs of large-scale models in use. As for evidence, I show that he himself aimed for such compatibility in his research agenda throughout the 1970s and 1980s.