A Post-Keynesian Perspective
Chapter 5: Uncertainty and ’the Economy as a Whole’
5. Uncertainty and ‘the economy as a whole’ INTRODUCTION The previous chapter dealt with how expectations-formation is subject to various forms of uncertainty at the level of individual behaviour. The point of the chapter was to study how microeconomic behaviour can be given as a systematic presentation, even though it is characterized by genuine uncertainty. It then becomes possible to introduce the concept of macroeconomic behaviour which is analytically applicable to the macroeconomic landscape. In this chapter we discuss another basic problem, also founded in science theory. It is how to shape the analytical model that summarizes the economy as a whole, based upon the macroeconomic landscape. As seen in Figure 3.2, the macroeconomic landscape gives us a representation which makes it clear that the landscape is made up of parts and aggregates. The parts will represent the macro-actors, institutions and the macro-markets. The separation of the different parts will be determined by the structure and the character of interaction within the macroeconomy together with the overall point of the investigation. The resulting aggregates are somewhat abstract; they may have no clear-cut empirical counterpart. An aggregate is analytically relevant in cases where it appears that the sum of the parts is different from the whole. An aggregate can for example be the whole financial sector, the whole Danish economy, the whole EU or even the global economy. As the ‘whole’ changes, the focus of the investigation, combined with the result of the ontological reflection, also determines the framework for what...
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