Fundamental principles of modeling in macroeconomics

Modern macroeconomic research has been increasingly concerned with its capability of establishing sound positive and normative conclusions in uncertain environments. The Lucas' critique imposes the requirement to do so from solid microeconomic principles which alter in a significant way the overall notion of fundamental value behind any convincing theory. The necessity to bring these general issues to dynamic settings to test alternative hypotheses introduces newtools of analysis which are required to understand the current literature, both theoretical and empirical. In this article we explore the notion of fundamental taken as given the level of total resources and show how it extends when different degrees of uncertainty are introduced. © Springer International Publishing Switzerland 2016. All rights reserved.

VIVO