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Complexity and the Art of Public PolicySolving Society's Problems from the Bottom Up$
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David Colander and Roland Kupers

Print publication date: 2016

Print ISBN-13: 9780691169132

Published to Princeton Scholarship Online: January 2018

DOI: 10.23943/princeton/9780691169132.001.0001

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How Macroeconomics Lost the Complexity Vision

How Macroeconomics Lost the Complexity Vision

Chapter:
(p.89) Chapter 6 How Macroeconomics Lost the Complexity Vision
Source:
Complexity and the Art of Public Policy
Author(s):

David Colander

Roland Kupers

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691169132.003.0006

This chapter tells the story of how macroeconomics developed as a separate field in an attempt to add aspects of complexity to the standard model with the aim of improving policy advice, but how those aspects of complexity were quickly lost it again. Instead of dealing with the macro economy as a complex system, macro economists focused on dotting is and crossing ts. The chapter begins by clarifying the difference between macroeconomics and microeconomics. Microeconomics builds a theory up from the individual elements—from the micro level to the macro level. It starts from assumptions of rational individuals and then analyzes how they would coordinate their actions, and what role the state should play in that coordination. Macroeconomics developed as a separate branch of economics when J. M. Keynes’s work was integrated into formal models in the 1930s and 1940s.

Keywords:   economic policy, microeconomics, macroeconomics

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