Abstract

http://ssrn.com/abstract=1355882
 
 

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The Financial Crisis and the Systemic Failure of Academic Economics


David Colander


Middlebury College - Department of Economics

Hans Föllmer


Humboldt University of Berlin

Armin Haas


Potsdam-Institut für Klimafolgenforschung (PIK)

Michael D. Goldberg


University of New Hampshire

Katarina Juselius


University of Copenhagen - Department of Economics

Alan Kirman


GREQAM

Thomas Lux


University of Kiel - Institute of Economics; University of Bonn - Economic Science Area

Birgitte Sloth


University of Copenhagen

March 9, 2009

Univ. of Copenhagen Dept. of Economics Discussion Paper No. 09-03

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 focus on models that, by design, disregard 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.

Number of Pages in PDF File: 18

Keywords: financial crisis, academic moral hazard, ethic responsibility of researchers

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Date posted: March 11, 2009  

Suggested Citation

Colander, David and Föllmer, Hans and Haas, Armin and Goldberg, Michael D. and Juselius, Katarina and Kirman, Alan and Lux, Thomas and Sloth, Birgitte, The Financial Crisis and the Systemic Failure of Academic Economics (March 9, 2009). Univ. of Copenhagen Dept. of Economics Discussion Paper No. 09-03. Available at SSRN: http://ssrn.com/abstract=1355882 or http://dx.doi.org/10.2139/ssrn.1355882

Contact Information

David Colander
Middlebury College - Department of Economics ( email )
Munroe Hall
Middlebury, VT 05753
United States
802-443-5302 (Phone)
Hans Follmer
Humboldt University of Berlin ( email )
Unter den Linden 6
Berlin, D-10099
Germany
49 30 2093 5817 (Phone)
49 30 2093 5848 (Fax)
Armin Haas
Potsdam-Institut für Klimafolgenforschung (PIK) ( email )
Telegraphenberg A31
Potsdam, Brandenburg D-14473
Germany
Michael D. Goldberg
University of New Hampshire ( email )
Durham, NH 03824
United States
603-862-3385 (Phone)
603-862-3383 (Fax)
HOME PAGE: http://pubpages.unh.edu/~michaelg/
Katarina Juselius
University of Copenhagen - Department of Economics ( email )
Copenhagen University Library
Licenssekretariatet Nørre Alle 49
DK-2200 Copenhagen N.
Denmark
Alan Kirman
GREQAM ( email )
Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France
+3391140770 (Phone)
+3391900227 (Fax)
Thomas Lux (Contact Author)
University of Kiel - Institute of Economics ( email )
Olshausenstr. 40
D-24118 Kiel, 24098
Germany
University of Bonn - Economic Science Area ( email )
Adenauerallee 24-42
D-53113 Bonn
Germany
+49-228-73-9519 (Phone)
+49-228-73-7953 (Fax)
Birgitte Sloth
University of Copenhagen ( email )
Solbjerg Plads 3
Copenhagen, DK-1455
Denmark
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