by Mark Skousen
Presidential Fellow, Chapman University
For centuries economists have been searching for the missing link that would tie microeconomics (theory of the firm and individual behavior) with macroeconomics (theory of the economy as a whole).
I believe my four-stage model of the economy does just that. Based on Austrian macroeconomics (known as Hayek’s triangles), I created a four-stage model of the macro economy in my book, The Structure of Production (NYU Press, 1990). A few years later, John Taylor of Stanford University (famous for his Taylor Rule) independently produced a 4-stage micro model involving four stages in the production of Caribou Coffee.
A eureka moment!
I’ve incorporated both 4-stage micro and macro models in my textbook, Economic Logic (Capital Press, 2014), now in its 4th edition. See especially chapter 14: <http://www.amazon.com/
SKOUSEN – TAYLOR LINK MACRO WITH MICRO
Figure 1. Universal 4-stage Macro Model of the Economy
Source: Mark Skousen, The Structure of Production (New York University Press, 1990); Economic Logic (Capital Press, 2014).
Figure 2. 4-stage micro model (production process of Caribou Coffee)
Source: John B. Taylor, Economics, 5th edition (Boston: Houghton Mifflin, 2006)