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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

    (TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Vincent Carret

    (Creighton University)

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 dynamizing the general equilibrium model, towards the new field of macrodynamics, with long-ranging consequences for the field.

Suggested Citation

  • Michaël Assous & Vincent Carret, 2023. "A micro foundational episode of the early history of macroeconomics: a 1932 debate on Walrasian economics and multiple equilibria," Working Papers hal-04360311, HAL.
    • Handle: RePEc:hal:wpaper:hal-04360311
    Note: View the original document on HAL open archive server: https://hal.science/hal-04360311
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