Munich Personal RePEc Archive

Barro, Grossman, and the domination of equilibrium macroeconomics

Plassard, Romain (2021): Barro, Grossman, and the domination of equilibrium macroeconomics.

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Abstract

Under which conditions did Robert Lucas’s microfoundational program come to dominate the field? My article sheds new light on this question. The focus is on why models incorporating rational expectations and market-clearing seduced macroeconomists. My case study is Robert Barro and Herschel Grossman. Drawing on Grossman’s archives, I define a framework for explaining their modeling choices. I show that methodological principles, tractability constraints, and research strategies explained why, at the end of the 1970s, Barro and Grossman preferred equilibrium over disequilibrium macroeconomics.

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