Mikael Carlsson, Teodora Borota Milicevic, Lena Hensvik and Oskar Nordström

Project summary

Microdata studies of the underlying assumptions of modern macroeconomic models

Macroeconomic variables such as unemployment and inflation are crucial to a society’s economic well-being. However, a society consists of individual people and firms, and it is their combined behaviour that determines macroeconomic developments. In recent decades, models designed to explain macroeconomic relationships have therefore increasingly been based on analyses of the behaviour of individual people and firms.

 

Alternative theoretical assumptions often lead to similar predictions about relationships between macroeconomic variables, but have been shown to result in widely differing recommendations for how economic policy should be conducted. Despite this, there is limited empirical evidence as to which of the different theoretical approaches best describes reality.

 

The research project aims to deepen our understanding of the relevance of the underlying assumptions about the behaviour of individuals and firms. By using unique Swedish register data, the project can study how individuals and firms behave and interact, thereby contributing to a stronger evidence base for economic policy decisions.