IDEAS home Printed from https://ideas.repec.org/h/elg/eechap/14869_3.html
   My bibliography  Save this book chapter

The Rise and Fall of Walrasian Microeconomics: The Keynesian Effect

In: Microfoundations Reconsidered

Author

Listed:
  • D. Wade Hands

Abstract

The highly regarded contributors to the book argue that the standard narrative of microfoundations is likely to be unreliable. They therefore re-examine the history of the relationship of microeconomics and macroeconomics, starting from their emergence as self-consciously distinct fields within economics in the early 1930s. They seek to go beyond the conventional history that is often told and written by practicing economists. From different perspectives they challenge the association of microfoundations with Robert Lucas and rational expectations and offer both a more complete and a deeper reading of the relationship between micro and macroeconomics.

Suggested Citation

  • D. Wade Hands, 2012. "The Rise and Fall of Walrasian Microeconomics: The Keynesian Effect," Chapters, in: Microfoundations Reconsidered, chapter 3, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:14869_3
    as

    Download full text from publisher

    File URL: https://www.elgaronline.com/view/9781781004098.00010.xml
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Franco Donzelli, 2007. "Equilibrium and Tâtonnement in Walras's Eléments," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 15(3), pages 85-138.
    2. Davis, John B., 2006. "The turn in economics: neoclassical dominance to mainstream pluralism?," Journal of Institutional Economics, Cambridge University Press, vol. 2(1), pages 1-20, April.
    3. Marvin Goodfriend & Robert G. King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296, National Bureau of Economic Research, Inc.
    4. Nicola Giocoli, 2003. "Modeling Rational Agents," Books, Edward Elgar Publishing, number 2585.
    5. Knetsch, Jack L, 1989. "The Endowment Effect and Evidence of Nonreversible Indifference Curves," American Economic Review, American Economic Association, vol. 79(5), pages 1277-1284, December.
    6. Roger E. Backhouse & David Laidler, 2004. "What Was Lost with IS-LM," History of Political Economy, Duke University Press, vol. 36(5), pages 25-56, Supplemen.
    7. Kerry A. Pearce & Kevin D. Hoover, 1995. "After the Revolution: Paul Samuelson and the Textbook Keynesian Model," History of Political Economy, Duke University Press, vol. 27(5), pages 183-216, Supplemen.
    8. D. Wade Hands, 2011. "Back To The Ordinalist Revolution: Behavioral Economic Concerns In Early Modern Consumer Choice Theory," Metroeconomica, Wiley Blackwell, vol. 62(2), pages 386-410, May.
    9. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    10. D. Wade Hands, 2006. "Integrability, Rationalizability, and Path-Dependency in the History of Demand Theory," History of Political Economy, Duke University Press, vol. 38(5), pages 153-185, Supplemen.
    11. Alan Kirman, 2006. "Demand Theory and General Equilibrium: From Explanation to Introspection, a Journey down the Wrong Road," History of Political Economy, Duke University Press, vol. 38(5), pages 246-280, Supplemen.
    12. Kirman, Alan, 1989. "The Intrinsic Limits of Modern Economic Theory: The Emperor Has No Clothes," Economic Journal, Royal Economic Society, vol. 99(395), pages 126-139, Supplemen.
    13. Franco Donzelli, 2006. "Walras and pareto on the meaning of the solution concept in general equilibrium theory," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(4), pages 491-530, December.
    14. D. Wade Hands, 2010. "Economics, psychology and the history of consumer choice theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(4), pages 633-648.
    15. Yves Balasko, 2009. "The Equilibrium Manifold: Postmodern Developments in the Theory of General Economic Equilibrium," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262026546, April.
    16. Knetsch, Jack L., 1992. "Preferences and nonreversibility of indifference curves," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 131-139, January.
    17. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    18. Christian E. Weber, 1999. "Slutsky and Additive Utility Functions, 1947–1972," History of Political Economy, Duke University Press, vol. 31(2), pages 393-416, Summer.
    19. Nicholas Georgescu-Roegen, 1950. "The Theory of Choice and the Constancy of Economic Laws," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(1), pages 125-138.
    20. Oskar Morgenstern, 1948. "Demand Theory Reconsidered," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 62(2), pages 165-201.
    21. Sonnenschein, Hugo, 1973. "Do Walras' identity and continuity characterize the class of community excess demand functions?," Journal of Economic Theory, Elsevier, vol. 6(4), pages 345-354, August.
    22. Pascal Bridel & Elisabeth Huck, 2002. "Yet another look at Leon Walras's theory of tatonnement," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(4), pages 513-540.
    23. Philip Mirowski & D. Wade Hands, 2006. "Introduction to Agreement on Demand: Consumer Theory in the Twentieth Century," History of Political Economy, Duke University Press, vol. 38(5), pages 1-6, Supplemen.
    24. Sonnenschein, Hugo, 1972. "Market Excess Demand Functions," Econometrica, Econometric Society, vol. 40(3), pages 549-563, May.
    25. Colander,David (ed.), 2006. "Post Walrasian Macroeconomics," Cambridge Books, Cambridge University Press, number 9780521865487, October.
    26. Pedro Garcia Duarte & Gilberto Tadeu Lima, 2012. "Microfoundations Reconsidered," Books, Edward Elgar Publishing, number 14869.
    27. Franco DONZELLI, 2006. "Walras and Pareto on the meaning of the solution concept in General Equilibrium Theory," Departmental Working Papers 2006-31, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    28. Chipman, John S., 2004. "Slutsky's praxeology and his critique of Bohm-Bawerk," Structural Change and Economic Dynamics, Elsevier, vol. 15(3), pages 345-356, September.
    29. Mantel, Rolf R., 1974. "On the characterization of aggregate excess demand," Journal of Economic Theory, Elsevier, vol. 7(3), pages 348-353, March.
    30. Amadae, S.M., 2003. "Rationalizing Capitalist Democracy," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226016535.
    31. N. Georgescu-Roegen, 1936. "The Pure Theory of Consumers Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 50(4), pages 545-593.
    32. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    33. Hands, D. Wade, 2007. "2006 HES Presidential address a Tale of two Mainstreams: Economics and Philosophy of Natural Science in the Mid-Twentieth Century," Journal of the History of Economic Thought, Cambridge University Press, vol. 29(1), pages 1-13, March.
    34. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    35. Frank H. Knight, 1944. "Realism and Relevance in the Theory of Demand," Journal of Political Economy, University of Chicago Press, vol. 52(4), pages 289-289.
    36. H. Uzawa, 1960. "Walras' Tâtonnement in the Theory of Exchange," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(3), pages 182-194.
    37. David Colander, 2018. "The Death Of Neoclassical Economics," Chapters, in: How Economics Should Be Done, chapter 5, pages 46-62, Edward Elgar Publishing.
    38. Moore, Henry Ludwell, 1914. "Economics Cycles: Their law and cause," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number moore1914.
    39. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    40. Hands, D. Wade, 1994. "Restabilizing Dynamics: Construction and Constraint in the History of Walrasian Stability Theory," Economics and Philosophy, Cambridge University Press, vol. 10(2), pages 243-283, October.
    41. Debreu, Gerard, 1974. "Excess demand functions," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 15-21, March.
    42. Christian E. Weber, 1999. "More on Slutsky's Equation as Pareto's Solution," History of Political Economy, Duke University Press, vol. 31(3), pages 575-586, Fall.
    43. John B. Davis, 2008. "The turn in recent economics and return of orthodoxy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(3), pages 349-366, May.
    44. Harold Hotelling, 1932. "Edgeworth's Taxation Paradox and the Nature of Demand and Supply Functions," Journal of Political Economy, University of Chicago Press, vol. 40(5), pages 577-577.
    45. Colander,David (ed.), 2006. "Post Walrasian Macroeconomics," Cambridge Books, Cambridge University Press, number 9780521684200, October.
    46. David Gale, 1963. "A note on global instability of competitive equilibrium," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 10(1), pages 81-87, March.
    47. Scarf, Herbert, 1981. "Comment on: "On the Stability of Competitive Equilibrium and the Patterns of Initial Holdings: An Example"," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 469-470, June.
    48. Franco Donzelli, 2005. "Equilibrium and Tâtonnement in Walras' Eléments," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1010, Universitá degli Studi di Milano.
    49. Elizabeth Waterman Gilboy, 1930. "Demand Curves in Theory and in Practice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 44(4), pages 601-620.
    50. D. Wade Hands, 2010. "Stabilizing consumer choice: the role of 'true dynamic stability' and related concepts in the history of consumer choice theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(2), pages 313-343.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vincent Carret, 2021. "Rupture and continuity in the original divide between micro-dynamics and macro-dynamics," Working Papers halshs-03242180, HAL.
    2. Goulven Rubin, 2014. "Disequilibrium economics: some comments about its nature, origins and fate. A review essay of "Transforming Modern Macroeconomics, The Relationship of Micro and Macroeconomics in Historical Persp," Working Papers halshs-01091765, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. G. Fagiolo & A. Roventini, 2009. "On the Scientific Status of Economic Policy: A Tale of Alternative Paradigms," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 6.
    2. Giorgio Fagiolo & Andrea Roventini, 2017. "Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(1), pages 1-1.
    3. Barbara Dluhosch, 2011. "European Economics at a Crossroads, by J. Barkley Rosser, Jr., Richard P. F. Holt, and David Colander," Journal of Regional Science, Wiley Blackwell, vol. 51(3), pages 629-631, August.
    4. repec:hal:spmain:info:hdl:2441/dcditnq6282sbu1u151qe5p7f is not listed on IDEAS
    5. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.
    6. repec:spo:wpmain:info:hdl:2441/dcditnq6282sbu1u151qe5p7f is not listed on IDEAS
    7. Giorgio Fagiolo & Andrea Roventini, 2016. "Macroeconomic Policy in DGSE and Agent-Based Models Redux," Working Papers hal-03459348, HAL.
    8. Przemysław Włodarczyk, 2016. "Modele reprezentatywnych podmiotów gospodarczych jako narzędzie analizy w nowej syntezie neoklasycznej," Bank i Kredyt, Narodowy Bank Polski, vol. 47(6), pages 553-584.
    9. J. Barkley Rosser Jr & Richard P.F. Holt & David Colander, 2010. "European Economics at a Crossroads," Books, Edward Elgar Publishing, number 13585.
    10. Dilip Nachane, 2017. "Dynamic Stochastic General Equilibrium (DSGE) Modelling :Theory And Practice," Working Papers id:11699, eSocialSciences.
    11. 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.
    12. Kemp-Benedict, Eric, 2013. "Material needs and aggregate demand," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 16-26.
    13. De Vroey Michel & Duarte Pedro Garcia, 2013. "In search of lost time: the neoclassical synthesis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 965-995, January.
    14. Marchionatti, Roberto & Sella, Lisa, 2015. "Is Neo-Walrasian Macroeconomics a Dead End?," CESMEP Working Papers 201502, University of Turin.
    15. Simone Landini & Mauro Gallegati & J. Barkley Rosser, 2020. "Consistency and incompleteness in general equilibrium theory," Journal of Evolutionary Economics, Springer, vol. 30(1), pages 205-230, January.
    16. 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.
    17. Pedro Garcia Duarte, 2012. "Not Going Away? Microfoundations in the Making of a New Consensus in Macroeconomics," Chapters, in: Microfoundations Reconsidered, chapter 6, Edward Elgar Publishing.
    18. Troy Tassier, 2013. "Handbook of Research on Complexity, by J. Barkley Rosser, Jr. and Edward Elgar," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(1), pages 132-133.
    19. Antonio Doria, Francisco, 2011. "J.B. Rosser Jr. , Handbook of Research on Complexity, Edward Elgar, Cheltenham, UK--Northampton, MA, USA (2009) 436 + viii pp., index, ISBN 978 1 84542 089 5 (cased)," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 196-204, April.
    20. Lu Zhang, 2017. "The Investment CAPM," European Financial Management, European Financial Management Association, vol. 23(4), pages 545-603, September.
    21. Sabiou M. Inoua & Vernon L. Smith, 2020. "The Classical Theory of Supply and Demand," Working Papers 20-11, Chapman University, Economic Science Institute.
    22. David Colander, 2018. "How Economists Got It Wrong: A Nuanced Account," Chapters, in: How Economics Should Be Done, chapter 12, pages 163-189, Edward Elgar Publishing.

    More about this item

    Keywords

    Economics and Finance;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:eechap:14869_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Darrel McCalla (email available below). General contact details of provider: http://www.e-elgar.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.