The state of macroeconomics

Abstract

“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time –perhaps for a long time.”

(Keynes)

In this paper, we wish to examine closely this so-called ‘civil war’, and whether it carries any consequences for the future development of macroeconomics, or whether it is just a microfoundations storm in a teapot. In doing so, we will argue that while the dissident critique is certainly welcome from a post-Keynesian perspective, it does not amount to a rejection of current thinking or models, but rather some tweaking around the edges.