Journal Article

Macro needs micro

Fabio Ghironi

in Oxford Review of Economic Policy

Volume 34, issue 1-2, pages 195-218
Published in print January 2018 | ISSN: 0266-903X
Published online January 2018 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/grx050
Macro needs micro

More Like This

Show all results sharing these subjects:

  • General Aggregative Models
  • Prices, Business Fluctuations, and Cycles
  • Monetary Policy, Central Banking, and the Supply of Money and Credit
  • International Trade
  • International Factor Movements and International Business
  • Macroeconomic Aspects of International Trade and Finance

GO

Show Summary Details

Preview

Abstract

An emerging consensus on the future of macroeconomics views the incorporation of a role for financial intermediation, labour market frictions, and household heterogeneity in the presence of uninsurable unemployment risk as key needed extensions to the benchmark macro framework. I argue that this is welcome, but not sufficient for macro—and international macro—to tackle the menu of issues that have been facing policy-makers since the recent global crisis. For this purpose, macro needs more micro than the benchmark set-up has been incorporating so far. Specifically, artificial separations between business cycle analysis, the study of stabilization policies, and growth macro, as well as between international macroeconomics and international trade, must be overcome. I review selected literature contributions that took steps in this direction; outline a number of important, promising directions for future research; and discuss methodological issues in the development of this agenda.

Keywords: DSGE; heterogeneous firms; macroeconomic policy; market entry and exit; monopoly power; producer dynamics; reallocation; structural reforms; trade

Journal Article.  13015 words. 

Subjects: General Aggregative Models ; Prices, Business Fluctuations, and Cycles ; Monetary Policy, Central Banking, and the Supply of Money and Credit ; International Trade ; International Factor Movements and International Business ; Macroeconomic Aspects of International Trade and Finance

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content. subscribe or login to access all content.