Publication number 2023-09
Publication Date December 2023
This paper documents an early fork in the development of macroeconomics, by
examining a debate between the Dutch economists Jan Tinbergen and Johan
Koopmans. In a 1932 paper, Tinbergen argued that two firms could be stuck in a “bad”
equilibrium in the absence of a coordinated action to increase employment. Koopmans
replied with a paper demonstrating that multiple equilibria in an exchange economy
could not be ranked on the basis of their productive efficiency. This debate contributed
to a larger turn away from dynamizing the general equilibrium model, towards the new
field of macrodynamics, with long-ranging consequences for the field.
