Macroeconomics and behavioral finance

a tale of two disciplines

Thomas Russell

pp. 153-159

in: Werner Leinfellner, Eckehart Köhler (eds), Game theory, experience, rationality, Berlin, Springer, 1998

Abstract

In the last fifty years there have been two revolutions in macroeconomics. The first, the Keynesian revolution, gave birth to macroeconomics as a sub-discipline distinct from microeconomics. By combining broad behavioral relationships, (the consumption function, the investment function, the liquidity preference function, etc.) into a single system, Keynesian macroeconomics demonstrated the existence of output levels at which involuntary unemployment was an equilibrium state.