The economic analysis of global warming is dominated by models based on optimal growth theory. These representative-agent models have an intrinsic distributional bias in favor of the rich. The bias is compounded by the use of ‘revenue-neutrality’ in the allocation of emission permits. The...

This note comments on the state of macroeconomics, arguing that the micro founded macro that developed after 1970s has been a wasteful detour. The paper will appear in a symposium in Homo Oeconomicus, vol. 27 (2), 2010, on the crisis and the response from the British Academy to the questions...

The economic analysis of global warming is dominated by models based on optimal growth theory. These representative-agent models have an intrinsic distributional bias in favor of the rich. The bias is compounded by the use of revenue-neutrality in the allocation of emission permits. The result...

The economic analysis of global warming is dominated by models based on optimal growth theory. This approach can generate biases in the presence of positional goods and status effects. We show that by ignoring these direct consumption externalities, integrated assessment models overestimate the...

Mainstream macroeconomics has pursued 'micro founded' models based on the explicit optimization by representative agents. The result has been a long and wasteful detour. But elements of the Lucas critique are relevant, also for heterodox economists. Challenging common heterodox views on...

This note comments on the state of macroeconomics, arguing that the "micro founded" macro that developed after 1970s has been a wasteful detour. The paper will appear in a symposium in Homo Oeconomicus, vol. 27 (2), 2010, on the crisis and the response from the British Academy to the questions...

Mainstream macroeconomics has pursued 'micro founded' models based on the explicit optimization by representative agents. The result has been a long and wasteful detour. But elements of the Lucas critique are relevant, also for heterodox economists. Challenging common heterodox views on...

The economic analysis of global warming is dominated by models based on optimal growth theory. This approach can generate biases in the presence of positional goods and status effects. We show that by ignoring these direct consumption externalities, integrated assessment models overestimate the...

The economic analysis of global warming is dominated by models based on optimal growth theory. These representative-agent models have an intrinsic distributional bias in favor of the rich. The bias is compounded by the use of "revenue-neutrality" in the allocation of emission permits. The result...