Modern Monetary Macroeconomics

Modern Monetary Macroeconomics

A New Paradigm for Economic Policy

New Directions in Modern Economics series

Edited by Claude Gnos and Sergio Rossi

This timely book uses cutting-edge research to analyse the fundamental causes of economic and financial crises, and illustrates the macroeconomic foundations required for future economic policymaking in order to avoid these crises.

Chapter 2: Towards a macroeconomic approach to macroeconomics

Alvaro Cencini

Subjects: economics and finance, financial economics and regulation, post-keynesian economics


In the introduction to his textbook on macroeconomic knowledge and analysis, Malinvaud (1998) has no misgivings concerning the microeconomic foundations of macroeconomics. Having claimed that macroeconomic theory ‘is content with models in which agents are not individually identified, the effects of their actions being captured through “behavioural laws”, expressed at more or less high levels of aggregation, for large groups of households or firms’ (Malinvaud, 1998, p. xix), he goes on to argue that Malinvaud’s (1998) opinion is clear cut, and perfectly in line with what is commonly believed by the great majority of economists. The knowledge of ‘complex structures of interactions, aggregation across heterogeneous groups, relative importance of conflicting effects or even forms of rationality in individual behaviour’ (p. xx) would seem too difficult to attain if it were derived from macroeconomic parameters. Thus, according to Malinvaud and most economists, recourse to microeconomics is a necessity precisely because behavioural macroeconomic laws are inferred from the microeconomic analysis of individual behaviour. True to his presupposition, Malinvaud finds the field of macroeconomic theory too complex a domain when characterized by conflicting interests and forms of behaviour impacted by uncertainty, and embedded in a changing legal and institutional framework.

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