Tobin’s Legacy and Modern Macroeconomics

James Tobin (1974, 1) began his John Danz Lectures by reminding his audience that “John Maynard Keynes died in 1946, and his General Theory of Employment, Interest and Money was published ten years earlier. Yet Keynes and his book continue to dominate economics.” A very few years later such a claim could not be made: when Tobin opened his Eyskens Lectures at Leuven, Neo-Keynesian Monetary Theory: A Restatement and Defense (1982c, 1–2), about “the living tradition of Keynesian monetary theory, which has greatly revised the letter of Keynes’s own writings, while remaining true to its spirit,” he acknowledged that “Today of course the tradition is under strong attack from a classical counter-revolution, espousing the quantity theory, the real-nominal dichotomy, and the neutrality of money.” As the subtitle of his Eyskens Lectures indicates, he had moved to the defensive — even though the lecture series had been rescheduled because he had to go to Stockholm on the original date of the lectures to accept the Royal Bank of Sweden Prize in Economic Science in Memory of Alfred Nobel.