In his early adult years, he served as a seaman and later an officer with the Swedish Army, before leaving to study for a bachelor's degree from the University of Lund, graduating in 1960.
He went to the United States on a Scandinavian American Foundation scholarship, landing at the University of Pittsburgh where he obtained a Master of Arts degree in economics.
He joined the University of Trento, Italy, in 1995, as a professor of monetary theory and policy.
Leijonhufvud used this observation as a point of departure to advocate a "cybernetic" approach to macroeconomics, where the algorithm by which prices and quantities adjust is explicitly specified, allowing the dynamic economy to be studied without imposing the standard Walrasian equilibrium concept.
[8] While the "cybernetic" approach may have failed to gain traction in mainstream economics,[9] it presaged the rational expectations revolution that would ultimately supplant the IS/LM model as the dominant paradigm in academic macroeconomics.
[10][8][7] Leijonhufvud wrote also the article "The Wicksell Connection: Variation on a Theme",[11] where he presented the Z-Theory.
Professional economists are treated as a tribe known as "the Econ" and ensuing tribal analogues are produced throughout the piece to characterize the group's unusual behavior.