Why do macro models look so different from micro models?
Why do researchers in the same profession, often studying the same question, write down models that look so different?
I think the answer is that applied micro economists view models very differently from macro economists.
In macro, a model is a proof of concept. It is a reasonable model with reasonable parameters that demonstrates that a particular mechanism can be big.
In micro, a model is a close approximation of the true data generating process (that’s why there is so much emphasis on hypothesis testing). The quantitative answers are taken seriously.
Last updated: 2016-Dec