More than thirty years ago, Charnes, Cooper and Schinnar (1976) established an enlightening contact between economic production functions (epfs) — a cornerstone of neoclassical economics — and information theory, showing how a generalization of the Cobb-Douglas production function encodes homogeneous functions. As expected by Charnes et al., the contact turns out to be much broader: we show how...

I argue that it is microeconomics that needs foundations, not macroeconomics. Preferences need to be built on biology, and, in particular, on neuroscience. In contrast, macroeconomics could benefit from rationalizations of aggregate economic phenomena by non-equilibrium statistical physics. Special issue Reconstructing Macroeconomics JEL: B22, B41, C82, D87

Microeconomic theory shows that only under certain conditions higher background risk increases the propensity to insure against independent marketable risks. We provide empirical evidence for the case of labor income risk and car insurance in the UK. The main result is that households with higher labor income risk spend more on insurance. This finding is consistent with microeconomic theory if ...

Integrated assessment models lack a microeconomic foundation in modelling environmental damages to the economy. To overcome this, damage coefficients are incorporated in standard microeconomic models. Firms and consumers take both damages and prices as given. Demand, supply, profit and expenditure functions under damage coefficients are derived that allow easy implementation in applied economic...

Microeconomic reform dominated Australian economic policy from the early 1980s until the end of the 20th century. Despite strong claims of success, focusing on the economic expansion since 1992, and rapid productivity growth between 1993-94 and 1998-99, evidence of improvements in the performance of the economy as a whole is weak and inconclusive. For an adequate evaluation of the microeconomic...

With the implementation of the Affordable Care Act (ACA), access to insurance and coverage of preventive care services has been expanded. By removing the barrier of shared costs for preventive care, it is expected that an increase in utilization of preventive care services will reduce the cost of chronic diseases. Early detection and treatment is anticipated to be less costly than treatment at ...

The 90s have witnessed a revival in economists' interest and hope of explaining aggregate and microeconomic investment behavior. New theories, better econometric procedures, and more detailed panel data sets are behind this movement. Much of the progress has occurred at the level of microeconomic theories and evidence; however, progress in aggregation and general equilibrium aspects of the inve...

This paper by Peter Dungan, Tony Fang and Morley Gunderson, which was supported by grants from Metropolis and the Social Sciences and Humanities Research Council, uses the FOCUS macroeconomic model of the University of Toronto to estimate the impact of a 100,000 per year increase in immigration over a ten-year period starting in 2012. The methodology relies on microeconomic information, much of...