Macroeconomics without laws : methodological and theoretical aspects

Abstract

This study develops an economic methodology in which,behavioural laws (in the sense of necessary connections between cause and effect) play no essential role. Hayek and Menger are important sources of inspiration. Economic behaviour is explained by way of tendencies rather than laws and insight into economic phenomena is gained by laying bare their "action structure" in which behavioural explanation and behavioural laws play no role. This methodology is applied to the explanation of macroeconomic coordination. The appropriate equilibrium conditions are developed and the relevant tendencies away from or towards equilibrium are identified. The institutions responsible for these tendencies are identified and anarysed. In the light of these findings, pre-Keynesian macroeconomics, the macroeoconomics of Walrasian theory, as well as Keynes's General Theory itself are critically assessed.