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A micro foundational episode of the early history of macroeconomics: a 1932 debate on Walrasian economics and multiple equilibria

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  • Michaël Assous
  • Vincent Carret

Abstract

This paper documents an early fork in the development of macroeconomics, by examining a debate between the Dutch economists Jan Tinbergen and Johan Koopmans. In a 1932 paper, Tinbergen argued that two firms could be stuck in a “bad” equilibrium in the absence of a coordinated action to increase employment. Koopmans replied with a paper demonstrating that multiple equilibria in an exchange economy could not be ranked on the basis of their productive efficiency. This debate contributed to a larger turn away from dynamising the general equilibrium model, towards the new field of macrodynamics, with long-ranging consequences for the field.

Suggested Citation

  • Michaël Assous & Vincent Carret, 2024. "A micro foundational episode of the early history of macroeconomics: a 1932 debate on Walrasian economics and multiple equilibria," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 31(2), pages 227-244, March.
    • Handle: RePEc:taf:eujhet:v:31:y:2024:i:2:p:227-244
    DOI: 10.1080/09672567.2024.2305952
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