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The Microfoundations Project in General Equilibrium Theory

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  • Rizvi, S Abu Turab

Abstract

The author (1) argues that the long-lived microfoundations project based on general equilibrium models has come to an end, and (2) shows that non-Walrasian models intended to provide microfoundations for macroeconomics are inadequate. The arguments are derived from the Sonnenschein-Mantel-Debreu (SMD) demonstration of the arbitrariness of aggregate excess demands in general equilibrium models of the Walrasian Arrow-Debreu-McKenzie type. The issues raised have significance for the proper method of modeling macroeconomic phenomena. For instance, the SMD results have led a growing number of general equilibrium theorists to make assumptions concerning macroeconomic structure in order to analyze other regularities at the macro level. These points validate the position that systematic macroeconomic phenomena are intrinsically macroeconomic. Copyright 1994 by Oxford University Press.

Suggested Citation

  • Rizvi, S Abu Turab, 1994. "The Microfoundations Project in General Equilibrium Theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 18(4), pages 357-377, August.
    • Handle: RePEc:oup:cambje:v:18:y:1994:i:4:p:357-77
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    Cited by:

    1. Richters, Oliver, 2021. "Modeling the out-of-equilibrium dynamics of bounded rationality and economic constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 846-866.
    2. Richters, Oliver, 2020. "Between bounded rationality and economic imperatives: essays on out-of-equilibrium dynamics," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 228534, September.
    3. Erhard Glötzl & Florentin Glötzl & Oliver Richters, 2019. "From constrained optimization to constrained dynamics: extending analogies between economics and mechanics," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(3), pages 623-642, September.
    4. Bill Gibson, 2008. "Keynesian And Neoclassical Closures In An Agent-Based Context," UMASS Amherst Economics Working Papers 2008-03, University of Massachusetts Amherst, Department of Economics.
    5. Geoffrey M Hodgson, 2023. "How stable routines can empower varied behaviors: defining routines as organizational capacities," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(6), pages 1319-1332.
    6. José Félix Cataño, 2003. "Teoría económica y neoinstitucionalismo. Comentarios a "El neoinstitucionalismo como escuela" de Salomón Kalmanovitz," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 5(9), pages 213-227, July-Dece.
    7. Bell, William Paul, 2009. "Adaptive interactive expectations: dynamically modelling profit expectations," MPRA Paper 38260, University Library of Munich, Germany, revised 09 Feb 2010.
    8. Stavros A. Drakopoulos, 2021. "The marginalization of absolute and relative income hypotheses of consumption and the role of fiscal policy," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 28(6), pages 965-984, November.
    9. Pedro Garcia Duarte & Gilberto Tadeu Lima, 2011. "Privileging Micro over Macro? A History of Conflicting Positions," Working Papers, Department of Economics 2011_01, University of São Paulo (FEA-USP).
    10. William A. Jackson, 2013. "The desocialising of economic theory," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 40(9), pages 809-825, July.
    11. Jean-Sébastien Lenfant & Jérôme Lallement, 2004. "L'équilibre général comme savoir : de Walras à nos jours," Working Papers hal-01765036, HAL.
    12. Lee, Frederic, 2011. "The making of heterodox microeconomics," MPRA Paper 30907, University Library of Munich, Germany.
    13. Bill Gibson, 2007. "A Multi-Agent Systems Approach to Microeconomic Foundations of Macro," UMASS Amherst Economics Working Papers 2007-10, University of Massachusetts Amherst, Department of Economics.
    14. Pirgmaier, Elke, 2017. "The Neoclassical Trojan Horse of Steady-State Economics," Ecological Economics, Elsevier, vol. 133(C), pages 52-61.
    15. Rausch, Sebastian & Schwarz, Giacomo A., 2016. "Household heterogeneity, aggregation, and the distributional impacts of environmental taxes," Journal of Public Economics, Elsevier, vol. 138(C), pages 43-57.
    16. Wright, Ian, 2009. "Implicit Microfoundations for Macroeconomics," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-27.
    17. Vicente Moreno-Casas, 2024. "What can complexity learn from Misesian economics?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 37(3), pages 267-291, September.
    18. Isabel Almudi & Julio Sánchez Chóliz, 2011. "Sustainable use of renewable resources: an identity approach," Journal of Bioeconomics, Springer, vol. 13(2), pages 97-123, July.
    19. Lee, Frederic, 2011. "Heterodox microeconomics and the foundation of heterodox macroeconomics," MPRA Paper 30491, University Library of Munich, Germany.
    20. Hodgson, Geoffrey M., 2013. "Observations on the legal theory of finance," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 331-337.
    21. Tsoulfidis, Lefteris & Chatzarakis, Nikolaos, 2024. "The Micro-Macro Divide of Neoclassical Economics vs. the Macro-Microscopic Classical Political Economy Approach," MPRA Paper 121951, University Library of Munich, Germany.
    22. Bill Gibson, 2008. "The Current Macroeconomic Crisis," UMASS Amherst Economics Working Papers 2008-02, University of Massachusetts Amherst, Department of Economics.
    23. Yahya Madra & Fikret Adaman, 2013. "Neoliberal reason and its forms:Depoliticization through economization," Working Papers 2013/07, Bogazici University, Department of Economics.
    24. Hodgson, Geoffrey M., 1997. "Economics and the return to Mecca: The recognition of novelty and emergence," Structural Change and Economic Dynamics, Elsevier, vol. 8(4), pages 399-412, October.

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