Time, expectations and financial markets
AbstractAfter the breakdown of the Bretton Woods system and the beginning of the neoliberal revolution, financial markets became very unstable. The theoretical background of the neoliberal revolution stands in the tradition of Léon Walras. He was very much impressed by Isaac Newton, used his methodology and wanted to lift economic thinking on the same level as Newton's mechanics. The rational expectation approach and the hypothesis of efficient financial markets follow this methodology. In a Keynesian-Schumpeterian approach, expectations cannot be explained by economic models - as in the case of rational expectations. The economy is not a self-regulating stable system. Development depends on social and political processes which are beyond the scope of narrow economic modelling. The world needs a fundamental re-regulation of asset and financial markets as well as labour markets to turn globalisation into a project with more winners than there are now. --
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Bibliographic InfoPaper provided by Berlin School of Economics and Law, Institute for International Political Economy (IPE) in its series IPE Working Papers with number 03/2009.
Date of creation: 2009
Date of revision:
Macroeconomics; Post-Keynesian; Financial Markets and the Macroeconomy;
Find related papers by JEL classification:
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
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