Macroeconomic Methodology
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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.
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Chapter 9: Methodological Perspectives for Realistic Macroeconomic Research: A Summary

Jesper Jespersen


DIVIDING LINES Macroeconomic theory is not unambiguous. Snowdon and Vane (2005) counted no less than ten different macroeconomic schools, which to various degrees are different from each other. It would be wrong to pretend that these macroeconomic theories are all genuine alternatives. They are not. As was evident from the ‘family tree’ in the introductory chapter, a number of theories develop from one another. This evolution is due partly to changes in society which changes the institutions and attitudes within the macroeconomic landscape and partly to the attainment of new analytical techniques in step with, among other things, the expansion of computer capacity. They vary quite considerably from strict theoretical models to models of a more descriptive nature. In this book I have chosen primarily to let the methodology which the different theories use determine the overall division of the macroeconomic schools. In the introductory chapter it was demonstrated that the assumption of the existence and analytical relevance of the term ‘general equilibrium’ was a very important division criterion for the evaluation of the macroeconomic models’ realism. That led to distinguishing between the ‘ideal’ models and the ‘realistic’ models, which simply have a different aim. The ideal models are useful to examine the conditions for proving existence and stability in a perfect market economy where general equilibrium is assumed. The realistic models have, to the contrary, the aim of uncovering causal relations which are relevant for understanding the actual macroeconomic development. Between those two distinct macroeconomic approaches we find the...

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