Children are often thought to be peculiarly honest – witness the story of “The Emperor's New Clothes.” My title comes from a group of my academic children: first-year graduate students. I teach a mandatory class in macroeconomic theory to graduate students in both an economics department and an agricultural economics department. The students in agricultural economics are typically more interested in crop patterns or natural resources – relentlessly microeconomic topics – than in unemployment, GDP growth, or interest rates. Each year at least one student, who I assume comes from the agricultural economics department, writes on the anonymous class evaluation something like this: “If macro- economics were real economics – which it is not! – this would have been a good class.” What is one to say to the honest and piercing doubts of an academic child?

The idea that macroeconomics stands in need of a microfoundational base is a commonplace among economists. I shall argue that what motivates this belief are principally ontological concerns, naïvely, but pointedly expressed, in my students' questions about the reality of macroeconomics. I shall argue that ontological reduction of macro- economics to microeconomics is untenable. Thus, while the program of microfoundations may illuminate macroeconomics in various ways, it cannot succeed in its goal of replacing macroeconomics.

To begin at the beginning, it might help to define the key terms. “Macroeconomics” is sometimes thought to be the economics of broad aggregates, and “microeconomics” the economics of individual economic actions.