Economic theory in an imperfect world: Frank Hahn, general equilibrium, and Keynesian economics

Abstract

Abstract Frank Hahn was both a Keynesian economist, active in policy debates, and an economic theorist. Placing his work in the context of attempts to make theoretical sense of Keynesian economics, this article explores the way Hahn used abstract general equilibrium theory to draw conclusions relevant to policy in an ‘imperfect’ world that does not conform to the assumptions made in the theory. Hahn’s rigorous approach to theorizing as the route to understanding is assessed in relation to the different approaches of Robert Lucas, Milton Friedman, Paul Samuelson and Axel Leijonhufvud.