The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Macroeconomics: Relations with Microeconomics

  • Peter Howitt
Reference work entry


The lack of clear connection between macroeconomics and microeconomics has long been a source of discontent among economists. Arrow (1967) called it a ‘major scandal’ that neoclassical price theory cannot account for such macroeconomic phenomena as unemployment. Lucas and Sargent (1979) argued that Keynesian macroeconomics is ‘fundamentally flawed’ by its lack of a firm microfoundation. Countless students and practitioners alike have complained of the schizophrenic nature of a discipline whose two major branches project such radically different views of the world.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Peter Howitt
    • 1
  1. 1.