A Discussion of Leijonhufvud’s Social Consequences of Inflation

Abstract

Commenting on Professor Leijonhufvud’s paper, Professor Davidson … [recalled] the story that Gerald Shove once said ‘Maynard has never taken the twenty minutes that is necessary to understand microeconomics’. Such stories underlay the widespread belief that Keynes did not have a proper microeconomic foundation for his macroeconomics, and therefore the continuing delusive search by our profession to find a ‘new microfoundation’ which was compatible with Keynes’s underemployment equilibrium phenomenon. This might, in part, explain why we were meeting here thirty-nine years after The General Theory.

Microfoundations of Macroeconomics (Cambridge: Cambridge University Press, 1977).