Axel Leijonhufvud, 9 June 1933 - 5 May 2022

I think it should be well-known that the Keynesian economics in Paul Samuelson's textbook, for example, does not capture a lot of the theory in Keynes General Theory. Axel Leijonhufvud, along with Robert Clower, raised this point in the 1960s from a standpoint outside of the emerging Post Keynesianism of Sidney Weintraub, Paul Davidson and Keynes' immediate colleagues at Cambridge.

I do not recall Leijonhufvud's book well. As I recall, much discussion occurred over the previous few decades around which selection of a few markets would be good to organize macroeconomics around and whether it mattered. Candidate markets were for goods, bonds, stocks, money, and labor. Leijonhufvud thought that Keynes organized his theory around a different selection than that selected by Keynesian economists. In the General Theory, Keynes insists that the line between bonds and money is not sharp. I think Leijonhufvud emphasized also that Keynes was a Marshallian, not a Walrasian. Clower suggested that the budget constraint for consumers should, in disequilibrium, be based on actual prices, not prices that would prevail after the completion of some sort of tâtonnement process. Leijonhufvud, I guess, emphasized interest rates and the discoordination possible with savings and investment. A decision to defer spending is not a decision to order consumption goods at a definite future date.

In later work, Leijonhufvud explored Wicksell's macroeconomics. (By the way, Gunnar Myrdal developed a macroeconomics much like Keynes from an immanent critique of Wicksell.) Leijonhufvud developed the difficult-to-formalize notion of the corridor. There is a range of prices, wages, and interest rates in which markets act normally and tend to fall back into equilibrium. If markets fall outside that range, expectations will be so upset that one cannot expect the economy to fall back onto a full-employment equilibrium path without some guidance.

I suppose I ought to mention Leijonhufvud's interest in Hayek too.

Selected Works by Leijonhufvud

• Keynes and the Keynesians: A suggested interpretation. American Economic Review 57(2) 1967: 401-410.
• On Keynesian Economics and the Economics of Keynes: A Study in Monetary Theory , Oxford University Press, 1968.
• Life among the econ, Western Economic Journal 1973.
• Information and Coordination: Essays on Macroeconomic Theory , Oxford University Press, 1981.