Saturday, 29 November 2008
Never enough microfoundations
My previous post suggests that declining returns to scale could be generated by a more fundamental productive process. Declining returns to scale would be considered as part of the microfoundations of many macromodels. The process of decomposing microfoundations into their own microfoundations could continue as far as you like, and the diversity of knowledge and its possible applied combinations would rise exponentially as a result. Economics I think should be treated as a science, and the same procedures of extensive and intensive analysis carried out to get the same benefits.