By setting Keynesian macroeconomic theory upon microeconomic foundations, this work helped build the "New Keynesian" paradigm, which is how most central banks still view the world.She worked at the Fed as a staff economist in the late 1970s, then returned as a governor from 1994 to 1997, when she argued both for higher and lower interest rates as her views on the risks of inflation evolved.
Macroeconomic stability, coupled with microeconomic measures such as tax incentives and a stronger competition regime, was to sort out the familiar British complaints of low productivity, low business investment in research and development (R&D) and fitful innovation.
The nearby chart shows that in the years before 1979, per capita output in Germany and France consistently grew faster than in Britain, but in subsequent years, grew more slowly.The relative improvement in British performance was probably more thanks to microeconomic, not macroeconomic policy.
In the longer run, the main factors tugging down German (and indeed European) economic performance do indeed remain structural and microeconomic: a byzantine and inefficient tax system, a bloated welfare system and excessive labour costs.The tax issue has already come to the fore in Germany in the recent showdown between business and government.
And microeconomic policy ought to do more than improve productivity and employment.
Mr Brown did the same, and also said where he thought Lord Lawson was wrong.In 1984 Lord Lawson argued that chancellors should assign distinct roles to macroeconomic and microeconomic policy.
And there is a host of microeconomic ideas, such as tax breaks for research and development, designed to promote investment.On this doctrinal question, Lord Lawson may prove the sounder judge.
They are also going head-to-head with Asians and central Europeans.To salvage the public finances at the same time as restraining wages or pursuing microeconomic reform may seem to be asking too much.
Much of America's superior economic performance over the past decade has surely been thanks to its microeconomic advantages.
Writing to delinquent taxpayers and telling them that most fellow-citizens have paid up makes them more likely to cough up, too.At the microeconomic level (the actions of firms and individuals), the behavioural school is now well-established.
But sceptics note that the surfeit of microeconomic meddling and deficit of monetary and fiscal prudence that have characterised the past four years were not of Mr Mantega's making; they were dictated from the top.
