Evolutions and Contradictions in Mainstream Macroeconomics

This article traces the complex intellectual path of Olivier Blanchard, a personification of the controversial evolution of macroeconomic research over the last three decades. After contributing to consolidation of the core of mainstream macroeconomics, Blanchard recently suggested ‘rethinking' some of its key aspects to take stock of the lessons of the 2008 Great Recession, which he witnessed as the International Monetary Fund's Chief Economist. This welcome discussion, which according to Blanchard should open mainstream macroeconomics to heterodox thinking, has so far produced a certainly interesting albeit theoretically contradictory synthesis and limited policy consequences. The most paradigmatic aspect of this rethinking of macroeconomics is represented by the abandonment in teaching of aggregate supply and demand in favor of a revival of the IS–LM model complemented by the Phillips curve. While this change of perspective does allow for the instability of ‘natural' equilibrium to be emphasized, a deeper reading may prove incompatible with the neoclassical foundations of the mainstream approach.