Abstract

In 1968, Axel Leijonhufvud published a treatise On Keynesian Economics and the Economics of Keynes that offered an interpretation of the latter quite different from standard Keynesian thinking at the time. The theme that Leijonhufvud extracted from Keynes’s Treatise on Money (1930) and General Theory of Employment, Interest and Money (1936) is the incompleteness of information and resulting failures in the intertemporal coordination of activities in large, complex economic systems. He has made this the principal theme of his further work, his collections of essays bearing such titles as Information and Coordination (1981) and Macroeconomic Instability and Coordination (2000). Leijonhufvud criticizes Keynesian economics for its reduction of Keynes’s ideas to a neo-Walrasian “frictions” view of deviations from optimal general equilibrium. In recent writings he has extended that critique to dynamic stochastic general equilibrium (DSGE)-based New Keynesian economics.