IDEAS home Printed from https://ideas.repec.org/p/kie/kieliw/1489.html
   My bibliography  Save this paper

The Financial Crisis and the Systemic Failure of Academic Economics

Author

Listed:
  • David Colander
  • Hans Föllmer
  • Armin Haas
  • Michael Goldberg
  • Katarina Juselius
  • Alan Kirman
  • Thomas Lux
  • Brigitte Sloth

Abstract

The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models

Suggested Citation

  • David Colander & Hans Föllmer & Armin Haas & Michael Goldberg & Katarina Juselius & Alan Kirman & Thomas Lux & Brigitte Sloth, 2009. "The Financial Crisis and the Systemic Failure of Academic Economics," Kiel Working Papers 1489, Kiel Institute for the World Economy.
  • Handle: RePEc:kie:kieliw:1489
    as

    Download full text from publisher

    File URL: https://www.ifw-members.ifw-kiel.de/publications/the-financial-crisis-and-the-systemic-failure-of-academic-economics/KWP_1489_ColanderetalFinancial%20Crisis.pdf
    Download Restriction: no

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Olaf Storbeck smackdown watch, nobel prize edition
      by Olaf Storbeck in Economics Intelligence on 2011-10-13 12:37:01
    2. A Nobel Prize for the Ancien Régime
      by Olaf Storbeck in Economics Intelligence on 2011-10-11 13:26:44
    3. Economics 2.0: a review
      by chris dillow in Stumbling and Mumbling on 2009-03-30 18:29:57
    4. Is de economische wetenschap verantwoordelijk voor het ontstaan van de kredietcrisis?
      by Hans Blommestein in Me Judice on 2009-11-25 18:00:00
    5. Temporary Crisis or Paradigm Shift?
      by matthiasgreiff in Matthias Greiff on 2009-10-19 23:50:21
    6. Where are the Development Political Scientists?
      by admin in NL-Aid on 2012-08-15 14:00:13
    7. The problems with economists: they don’t understand development
      by Seth Kaplan in Global Dashboard on 2012-09-19 22:39:27
    8. Time to democratize science?
      by ? in Backreaction on 2010-12-16 22:50:00

    More about this item

    Keywords

    financial crisis; academic moral hazard; ethic responsibility of researchers;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • G1 - Financial Economics - - General Financial Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:kie:kieliw:1489. 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: (Dieter Stribny). General contact details of provider: http://edirc.repec.org/data/iwkiede.html .

    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.