Introduction

Abstract

The Hicksian summary and interpretation of Keynesian theory, which has been the theoretical base of numerous textbooks on macroeconomics, was for a long time supposed to provide a sufficient platform for the explanation of real economic processes (Hicks, 1939). In this simplified world the economic system appears to be manageable in the sense that economic goals like full employment, growth and stability can be reached by controlling a few macroeconomic parameters. But in the 70s’ economic phenomena of inflation and unemployment occurred, which the simple Hicksian IS/LM — paradigm cannot explain. A closer look on the theoretical framework showed inconsistencies in the model and logical contradictions in the foundation of the hypotheses (Clower, 1965; Leijonhuvfud, 1968; Phelps, 1970; Bombach, Ramser, and Timmerman, 1984).