Macroeconomic Methodology

Macroeconomic Methodology

A Post-Keynesian Perspective

Jesper Jespersen

Jesper Jespersen presents a treatise on the importance of the choice of methodology within macroeconomics. Given that no scientifically based macroeconomic policy recommendation should be established without an evaluation of the methods employed, this book gives a clear exposition of how proper macroeconomic analysis should be undertaken. Furthermore, it is convincingly argued that one of the lasting contributions of John Maynard Keynes was his emphasis on methodology; that macroeconomic consequences of uncertainty could not be analysed within the established general equilibrium framework. It is due to post-Keynesian economics supported by critical realism that the understanding of Keynes’s methodology has been resurrected, which has eventually resulted in renewed debate on realistic macroeconomic policies to restore full employment without inflation.

Chapter 3: The Macroeconomic Landscape: An Example of an Ontological Reflection

Jesper Jespersen

Subjects: economics and finance, economic psychology, history of economic thought, methodology of economics, post-keynesian economics


The general [Post-Keynesian] methodological approach is an open system approach, involving collections of partial analyses that aim to build up a (fallible) knowledge of different aspects of socioeconomic systems. Rather than relying on a single, formal method, a range of methods are employed (formal, institutional, and historical for example) that draw on different types of evidence. (Dow, 2001: 16–17) THE SOCIALLY EMBEDDED MACROECONOMIC VISION The subject of this book is macroeconomic methodology as a means of understanding ‘the economy as a whole’, an expression often used by Keynes to demarcate his field of research. No macroeconomic phenomenon can be analysed in a state of isolation. The macroeconomic system is an interconnected whole. A realistic macroeconomic approach requires the development of a macroeconomic theory and method that correspond to the social reality. It is the relevance of the theory and method that determines the quality of the knowledge we are able to acquire. For this reason I will first illustrate the macroeconomic perspective in a context that comprises society as a whole. I will then review a series of simplifications of reality, which will provide a basis for a realistic macroeconomic analysis. The overall dynamics of society has to be considered as an interconnected process. In this perspective, the macroeconomic phenomena are connected with the other social sciences in a common ‘social reality’. They are, in the words of Karl Polanyi, ‘socially embedded’. The division into disciplines such as economics, law, politics and sociology tends to create a set of...

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