Implicit microfoundations for macroeconomics

A large market economy has a huge number of degrees of freedom with weak micro-level coordination. The "implicit microfoundations" approach considers this property of micro-level interactions to more strongly determine macro-level outcomes compared to the precise details of individual choice behavior; that is, the "particle" nature of individuals dominates their "mechanical" nature. So rather than taking an "explicit microfoundations" approach, in which individuals are represented as "white-box" sources of fully-specified optimizing behavior ("rational agents"), we instead represent individuals as "black box" sources of unpredictable noise subject to objective constraints ("zero-intelligence agents"). To illustrate the potential of the approach we examine a parsimonious, agent-based macroeconomic model with implicit microfoundations. It generates many of the reported empirical distributions of capitalist economies, including the distribution of income, firm sizes, firm growth, GDP and recessions. -- Microfoundations ; macroeconomics ; aggregation, power laws