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Beyond Microfoundations: Post Walrasian Macroeconomics. Edited by David Colander. New York: Cambridge University Press, 1996. 266 pp. ISBN 0-521-55237-0. $44.95. This interesting collection of 13 essays is intended to spell out a new macroeconomic vision. Although the essays occasionally discuss policy issues, as the editor points out [9], the Post Walrasian program is really a methodological and theoretical revolution.
The Overview sets out the general orientation of Post Walrasian economics. David Colander develops its distinguishing characteristics by pointing out some theoretical affinities and differences. Affinities are stressed by pointing out that the Post Walrasian approach could have been called "Marshallian macroeconomics," "New Institutionalist macroeconomics" or "Coordination macroeconomics." Alternatively, the Post Walrasian approach can be described by its three main themes.
One theme is multiple equilibria and complexity. The basic idea here is the discontent with the Walrasian claim to represent, using comparative statics, economies with structural and dynamical complexities. A second Post Walrasian theme is bounded rationality, the implausibility of the Walrasian presupposition that individuals can rationally deal with the complexity of the entire economic system. A third theme is institutions and non-price coordination. The focus here is on explaining the apparent stability of everyday economic systems which are at variance with the Walrasian claim that such observed stability indicates uniqueness of equilibria and non-complex dynamics.
This opposition to Walrasian economics takes issue particularly with three classes of alternative models: (i) the non-Walrasian models of Michael Woodford or J.-M. Grandmont, (ii) the rational expectations models of Robert Lucas and Leonard Rapping and (iii) New Keynesian macroeconomic models insofar as they assume representative agents. In the criticism of each of these the theme of overdone rationality emerges.
The attack against Walrasian economics is two-pronged. One prong is directed at its formalism; the other at its plausibility. On the formal...