Economy and economics: the twin crises
AbstractThis paper explores the interaction between the Great recession triggered by the US subprime mortgages crisis and the twin crisis of macroeconomics. We argue that a major determinant of the subprime crisis and its dire consequences has been an approach to economics that is unable to deal with irregular phenomena. On the other hand, the unexpectedly deep financial crisis that has heavily affected the real economy makes clear that we need a major redirection of macroeconomic theory to make it able to explain, forecast and control irregular phenomena. The recent interaction between the crisis of the economy and the crisis of macroeconomics is analyzed in the light of similar preceding episodes in the 20th century: the Great contraction of the 1930s and the Great stagflation of the 1970s.
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Bibliographic InfoPaper provided by Department of Economic Policy, Finance and Development (DEPFID), University of Siena in its series Department of Economic Policy, Finance and Development (DEPFID) University of Siena with number 0410.
Date of creation: Jun 2010
Date of revision:
subprime crisis; Great recession; Great stagflation; Great contraction; Great depression; liberalism; laissez-faire; Keynesism; neoliberalism; new classical economics; theory and facts; scientific revolutions.;
Find related papers by JEL classification:
- A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
- E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- G01 - Financial Economics - - General - - - Financial Crises
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
- NEP-CBA-2010-10-23 (Central Banking)
- NEP-HIS-2010-10-23 (Business, Economic & Financial History)
- NEP-HPE-2010-10-23 (History & Philosophy of Economics)
- NEP-PKE-2010-10-23 (Post Keynesian Economics)
- NEP-SOG-2010-10-23 (Sociology of Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Irregular phenomena and the macroeconomics research agenda
by Economic Logician in Economic Logic on 2010-11-15 15:56:00
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