Structuralist and Behavioral Macroeconomics

Mainstream macroeconomics is based on rational representative agents, but behavioural evidence shows that this is inadequate for real-world decision-making. This book offers an empirically grounded alternative to the dominant paradigm, highlighting how dynamic interactions across markets can generate instability, endogenous cycles, and secular stagnation. It engages with macroeconomic theory and provides a multi-faceted view that explains why it is time to rethink its foundations and offers a path forward.

Format: Hardback
Length: 398 pages
Publication date: 21 September 2023
Publisher: Cambridge University Press

Mainstream macroeconomics is built upon the notion of perfectly rational representative agents, yet there is a growing recognition that economic theories based on such agents are insufficient for guiding real-world decision-making. While behavioural evidence has had a profound impact on microeconomics, the same cannot be said for macroeconomics. This book is a part of a movement aimed at bringing about a similar transformation in macroeconomics as behavioural thinking has achieved in microeconomics.

The book employs behavioural evidence and insights from Keynesian and institutionalist traditions to present an empirically grounded alternative to the dominant paradigm in macroeconomic theory. It emphasizes how dynamic interactions across markets can lead to instability, endogenous cycles, and secular stagnation. It fully engages with macroeconomic theory, offering a multi-faceted perspective that explains why it is necessary to rethink its foundations and provides a roadmap for moving forward.

One of the key insights of the book is that the traditional view of markets as efficient and self-regulating is overly simplistic. Markets are influenced by a wide range of factors, including human behaviour, institutions, and political decisions. The book argues that these factors can lead to unintended consequences and that a more nuanced understanding of market dynamics is necessary to develop effective policies.

Another important theme is the role of government intervention in addressing economic problems. The book advocates for a more active role for government in managing economic fluctuations, promoting stability, and ensuring social welfare. It suggests that government policies such as fiscal stimulus, monetary policy, and regulation can play a crucial role in promoting economic growth and reducing inequality.

The book also highlights the importance of understanding the dynamics of the global economy. The rise of emerging markets, the increasing interconnectedness of economies, and the challenges posed by climate change require a new approach to macroeconomic theory. The book proposes a framework for analyzing the global economy that takes into account the interdependence of countries and the role of international institutions in shaping economic outcomes.

In conclusion, this book offers a valuable contribution to the field of macroeconomics. By challenging the traditional paradigms and employing behavioural evidence and insights, it provides a fresh perspective on how to understand and address economic problems. It is a must-read for policymakers, economists, and anyone interested in understanding the complex dynamics of the modern economy.

Weight: 860g
Dimension: 177 x 253 x 30 (mm)
ISBN-13: 9781009367325