The relationship between Micro and Macro levels economics performance Essay

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It can be stated that both micro as well as macroeconomics study problems relating to scarcity and choice. However, the basic difference is that while micro economics studies such problems at the level of individual economic unit, macroeconomics studies these problems at the level of an economy as a whole.

Strategic management studies increasingly introduce multilevel modeling to analyze the interaction between firm performance and (agglomerated) contexts (Beugelsdijk, 2007). Following social sciences, hierarchical random effects or multilevel modeling, which allows the micro level and macro level to be modeled simultaneously, is becoming an increasingly common practice in strategic management and organization studies. Similarities of macro relations to micro behavior are enhanced by uncertainty.

As a first step, the baseline micro model of employment hysteresis under certainty is described. As a second step, we deal with the aggregation approach under certainty. Third, we focus on the modification to our micro level analysis which become necessary by consideration of uncertainty. As a fourth step, we present a method to solve the problem of aggregation of hysteresis from micro to total economy employment under uncertainty.

The micro-macro level heterogeneity and interrelationships can be addressed adequately. One can distinguish micro-level and macro-level relationship between health and economic performance. Studies at the micro-level focus on the casual mechanisms through which health affects the economic behavior and performance of individuals and households. Studies at the macro-level analyze the statistical relationships between investments in health, heath status and economic development. (Szirmai & Szirmai, 2005)

The micro relationships between economic performance and attitudes redistribution function very differently from relationships at the macro level. For micro there is a striking and predictable linkage between social class and attitudes towards government spending. Economically secure citizens are much less supportive of the redistributive functions and more supportive of accelerated tax relief than citizens drawn from economically vulnerable locations in the society.

If the macro level followed the same logic as the micro level, we would expect that the aggregate perceptions of economic performance strengthen there will be more secure people and hence less support for active state redistribution. (Strain, Banting, Sharpe & St-Hilaire, 2003). Despite the focus in the empirical literature on the relationship between agglomeration economies and the regional growth as a macro-level phenomena, the underlying theory of agglomeration contains booth macro and micro- level propositions. At the macro level, this involves the use of panel regressions or time-series methods to test for the effect of State Business Relations on economic growth. At the micro level, the contributors assess the impact of State Business Relations on productivity growth at the industry and firm (micro) levels, using state-of-the-art econometric methods that address the endogeneity problem in standard productivity estimations.

In conclusion, macro-level empirical work has been concerned with how entrepreneurship influences economic measures of development, such as GDP, productivity, and employment. Very few studies have considered non-monetary or subjective measures. Most micro-level studies focus on the why and how of entrepreneurship, not its impact on development. Nevertheless, studies on productivity, innovativeness, and growth and female entrepreneurs provide insights on whether and how entrepreneurship matters for development.



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