N o End to the Consensus in Macroeconomic Theory? A Methodological Inquiry

After the acrimonious debates between the N ew C lassical and N ew K eynesian economists in the 1980s and 1990s, a consensus developed, namely, the N ew N eoclassical S ynthesis. However, the 2007 credit crunch exposed the severe limitations of this approach. This article presents a methodological analysis of the N ew N eoclassical S ynthesis and how the paradigmatic heuristic of the representative agent, namely, market clearing subject to sticky prices, excluded the K eynesian notion of involuntary unemployment arising from lack of effective demand. It shows these models may be modified to produce K eynesian results, but are ruled out of consideration by proponents of the N ew N eoclassical approach by weak incommensurability. It concludes that because of this the N ew N eoclassical S ynthesis, in spite of its failure to explain the sub‐prime crisis, is likely to resist successfully the resurgence in K eynesian economics.