Microeconomics and macroeconomics

Microeconomics is the study of the behavior of individual agents, either households or firms. Understanding the response of a household to changes in prices and wages, or similarly, trying to understand how firms make their production and pricing decisions, all are microeconomic subjects.

Macroeconomics studies the aggregate economy. It tries to understand why economies grow, and why they go through cycles, and how various economies interact. It is the sum total of microeconomic behaviour in a given geographic area. In other words, macroeconomists try to explain the patterns that can be found in time-series data, data that is the basis for the indicators used in EconDash. Hence our main concern in this site is macroeconomic.

Historically, micro and macro were studied independently, using different tools. Macroeconomists would model "an economy", just as a black box, without taking into account the agents that interact and de facto are the economy. In the 1970s, this approach was criticized, and macroeconomists have used individual agents as the starting point of their models ever since. This is the approach taken here.