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Volkswirtschaft - Open Access LMU - Teil 01/03 Podcast
Isolation and Aggregation in Economics

Isolation and Aggregation in Economics

Volkswirtschaft - Open Access LMU - Teil 01/03 vor 41 Jahren

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In explaining economic phenomena, economic analysis concentrates on
selected influences and fixes the host of other factors under a
ceteris paribus clause. This view, which goes back to Alfred
Marshall (1842-1924), is developed in the first part of the book.
Aggregation is viewed as a particular application of ceteris
paribus analysis - isolation from "structural effects". This leads
to an approach, called "closed aggregation", which was introduced
by Kenneth May and is also implicit in Keynes' writings but has
been neglected more recently. It is argued that macroeconomic
models are more stable and more general than the corresponding
micro models and that there is no simple analogy between them.