Axel Leijonhufvud

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Axel Leijonhufvud
Born	1933 Stockholm, Sweden
Residence	USA
Nationality	Swedish
Fields	Economist
Institutions	UCLA Brookings Institution
Alma mater	Lund University University of Pittsburgh Northwestern University
Known for	Alternatives to Keyensian macroeconomics

Axel Leijonhufvud (1933 Stockholm, Sweden) is a Swedish economist, currently professor emeritus at UCLA. He received his Ph.D. from Northwestern University in 1967. His most famous scholarly article is On Keynesian Economics and the Economics of Keynes which appeared in the AER in 1968. In this article, Leijonhufvud argued that John Hicks' IS/LM formulation of Keynes General Theory which emphasizes Walrasian equilibrium and rigid wages as an explanation for unemployment is in fact contrary to Keynes' writings. Rather, Leijonhufvud's reading of Keynes emphasizes disequilibrium phenomena, which can't be addressed in the IS/LM framework, as central to Keynes explanation of unemployment and economic depression. Leijonhufvud used this observation as a point of departure to advocate a "cybernetic" approach to macroeconomics where the algorithm by which prices and quantities adjust is explicitly specified allowing the dynamic economy to be studied without imposing the standard Walrasian equilibrium concept. In particular, Leijonhufvud advocated formally modelling the process by which information moves through the economy.^[1] While the "cybernetic" approach may have failed to gain traction in mainstream economics,^[2] it presaged the rational expectations revolution that would ultimately supplant the IS/LM model as the dominant paradigm in academic macroeconomics.