Aggregation and the Microfoundations of Dynamic Macroeconomics (The ASSET Series) - Hardcover

Forni, Mario; Lippi, Marco

Hardcover

ISBN 10: 019828800X ISBN 13: 9780198288008

Publisher: Clarendon Press, 1998

Synopsis

Through careful methodological analysis, this book argues that modern macroeconomics has completely overlooked the aggregate nature of the data. In Part I, the authors test and reject the homogeneity assumption using disaggregate data. In Part II, they demonstrate that apart from random flukes, cointegration unidirectional Granger causality and restrictions on parameters do not survive aggregation when heterogeneity is introduced. They conclude that the claim that modern macroeconomics has solid microfoundations is unwarranted. However, some important theory-based models that do not fit aggregate data well in their representative-agent version can be reconciled with aggregate data by introducing heterogeneity.

About this title

About the Author

Mario Forni is at University of Modena. Marco Lippi is at Universita di Roma "La Sapienza".

Edition details

• Publisher: Clarendon Press
• Publication date: 1998
• Language: English
• ISBN 10: 019828800X
• ISBN 13: 9780198288008
• Binding: Hardcover
• Edition number: 1
• Number of pages: 254