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The Review of Austrian Economics

, Volume 25, Issue 3, pp 223–241 | Cite as

Hayek, Keynes, and modern macroeconomics

  • Roger Koppl
  • William J. LutherEmail author
Article

Abstract

The Great Recession seems to be creating a change in the trend of macroeconomic thinking. Prior to the financial crisis of 2008, dynamic stochastic general equilibrium (DSGE) models dominated the macroeconomics literature without any apparent challengers on the horizon. Since then, however, we have seen an increasing interest in macroeconomic models that address the state of confidence (“animal spirits”), complexity, cognition, and radical uncertainty. Most of the renewed interest in animal spirits, complexity, cognition, and radical uncertainty has come from a more or less “Keynesian” perspective. We discuss the potential to emphasize these elements from a more “Hayekian” perspective and argue that Austrian approaches to macroeconomics along these lines are more likely to resonate with mainstream economists than in years past.

Keywords

Animal spirits Cognition Complexity Great recession Hayek Keynes Radical uncertainty State of confidence 

JEL codes

B53 E32 G12 E5 E6 

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© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Institute for Forensic Science Administration, M-MS2-02Fairleigh Dickinson UniversityMadisonUSA
  2. 2.Department of EconomicsGeorge Mason UniversityFairfaxUSA

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