The problem of integrating microeconomics with macroeconomics

Abstract

The last few decades have registered attempts on the part of some economists to bridge the gap between microeconomics and macroeconomics. The results so far have not been encouraging. One is tempted to ask: is this because of half-hearted attempts? Or is it because the methods used might not have been the best or the most conducive to the construction of an appropriate bridge? Before answering these questions it would not be out of.place, I think, to give a brief account of the raison d' etre of macroeconomics and the importance it has acquired in a short time. We have to go back to the Physiocrats and particularly to Quesnay's Tableau Economique to discover the origins of macroeconomic analysis. For the first time we find a model of the flow of income in the economy; for the Tableau was not concerned only with the allocation of resources but also with the size of the net product. This was a truly macroeconomic model despite its limitations due to the Physiocrats' belief in the unique productivity of land and the prime importance they gave to consumption in maintaining the circular flow of income.