ed from issues they could not handle but which enabled them to analyse the dynamics in which they were interested. However, a more common reaction was to focus on the formal models and to confine their theorizing to what could be said rigorously. Founding macroeconomics on rigorous utilitymaximizing microfoundations was important. This was, no doubt, the reason why Patinkin’s Chapter 13 was neg...

The demise of the IS-LM model and its replacement by stochastic intertemporal equilibrium models is probably the most salient change that occurred in macroeconomics during the last quarter of the twentieth century, a shift that many commentators have viewed as a Kuhnian scientific revolution. My aim in this paper is to analyse it against the background of what I call the Marshall-Walras divide....

Analysing the recent history of macroeconomics, my paper claims that the new classical revolution should be viewed as a substitution of Walrasian macroeconomics to the earlier prevailing Marshallian macroeconomics. The first part of the paper is concerned with two conceptual prerequisites, the relationship between macroeconomics and general equilibrium, the meaning of the “Keynesian” modifier. ...

T hese days macroeconomics has become more respectable than it used to be. I can remember when many economists liked to say: Microeconomics is not problematic, but I just don’t understand macroeconomics. There was a definite implication that something must be wrong with macroeconomics, not with the observer. Of course macroeconomics cannot be “exact;” it has to work by rough analogy and empiric...

The paper surveys the ‘old’ and ‘new’ political macroeconomics. In the former we consider how governments can be seen to manipulate the economy as to satisfy opportunistic or ideological motives, thereby creating opportunistic or partisan political business cycles. We examine how the macroeconomic revolution of the 1970s cast doubts on the ability of governments to freely and repeatedly create ...

This chapter reviews models of intertemporal choice consumption demand and labour supply. We discuss optimal decisions by individuals at the microeconomic level and the implications for the aggregate economy. The chapter describes the equilibrium in a market-clearing neoclassical model and analyses effects of productivity and government sector shocks on optimal decisions by consumers and worker...