IDEAS home Printed from https://ideas.repec.org/a/mul/jqat1f/doi10.1427-33902y2011i1p9-36.html
   My bibliography  Save this article

The Crisis in Economic Theory

Author

Listed:
  • Alan Kirman

Abstract

This paper discusses modern macroeconomic and financial models in the light of the current crisis. Theory has been revealed to be inadequate in its explanation of the origins and the nature of the crisis, as Jean-Claude Trichet the Governor of the European Central bank and his colleagues at other central banks have indicated. Basic macroeconomic models, however sophisticated have continued to be based on the same foundations shown to be wanting in the 1970s and financial market models have continued to use the «efficient markets hypothesis» despite warnings by numerous mathematicians and economists since 1900 as to its unsound foundations. We need to construct models which may not be able to predict the timing of the onset of a crisis but will encompass the possibility of one. The most promising candidates for such models are those which view the economy as a complex adaptive system, may use some of the tools of statistical physics and do not necessarily use the standard equilibrium approach.

Suggested Citation

  • Alan Kirman, 2011. "The Crisis in Economic Theory," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 9-36.
  • Handle: RePEc:mul:jqat1f:doi:10.1427/33902:y:2011:i:1:p:9-36
    as

    Download full text from publisher

    File URL: https://www.rivisteweb.it/download/article/10.1427/33902
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.rivisteweb.it/doi/10.1427/33902
    Download Restriction: no

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Magda Fontana, 2014. "Pluralism(s) in economics: lessons from complexity and innovation. A review paper," Journal of Evolutionary Economics, Springer, vol. 24(1), pages 189-204, January.

    More about this item

    Keywords

    crisis; general equilibrium; forecasting; networks; complex system; B22; D84; D85; E10; E44.;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mul:jqat1f:doi:10.1427/33902:y:2011:i:1:p:9-36. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: https://www.rivisteweb.it/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.