What kind of microfoundations? Notes on the evolutionary approach

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Publication

What kind of microfoundations? Notes on the evolutionary approach

Author:

Author:

Cimoli, Mario -
Porcile, Gabriel -

Physical Description: 29 páginas.

Publisher: ECLAC

UN Symbol (Signatura): LC/L.3955

Date:

January 1, 2015

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Description

Abstract:

The microfoundations of economic models are a hotly debated topic in the literature. The debate is important because microfoundations —the ways in which agents decide and behave— have implications that go beyond a specific firm, market or activity; they strongly condition macroeconomic outcomes. This document addresses the classical problems of rationality, uncertainty and institutions: when there is Keynes-Knight uncertainty and rationality is bounded, decision making adopts the form of conventional rules or heuristics. The hyper-rational representative agent of the rational expectations world could generate highly misleading outcomes in macro models. Section 2 applies this discussion to the study of technical change and to innovation and diffusion of technology in the international system, which transform the patterns of specialization. Section 3 discusses the forces that may trap a country in a low-growth trap and the crucial role of institutions in escaping from this trap.

Table of contents

  • Abstract
  • I. Rationality and institutions in an uncertain world
  • II. Learning the co-evolution of capabilities and the production structure
  • III. Structural inertia, lock-in and the role of institutions in escaping from a low-growth trap
  • IV. Institutions, power and Schumpeterian political economy
  • V. Combining the supply side and the demand side: learning and growth paths.