The Unfortunate Uselessness of Most 'State of the Art' Academic Monetary Economics

Buiter, Willem H.

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The Unfortunate Uselessness of Most 'State of the Art' Academic Monetary Economics

VoxEU, Research-based policy analysis and commentary from leading economists, March 6, 2009

5 Pages Posted: 10 Sep 2014

See all articles by Willem H. Buiter

Willem H. Buiter

Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Columbia University; Independent Economic Adviser; Independent

Date Written: March 6, 2009

Abstract

Standard macroeconomic theory did not help foresee the crisis, nor has it helped understand it or craft solutions. This columns argues that both the New Classical and New Keynesian complete markets macroeconomic theories not only did not allow the key questions about insolvency and illiquidity to be answered. They did not allow such questions to be asked. A new paradigm is needed.

Keywords: financial crises, insolvency, liquidity, incomplete markets, DSGE models, methodology, New Keynesian economics, New Classical economics

JEL Classification: B00, B22, B23, B49, B50, D50, D52, E00, E30, E37, E47

Suggested Citation: Suggested Citation

Buiter, Willem H., The Unfortunate Uselessness of Most 'State of the Art' Academic Monetary Economics (March 6, 2009). VoxEU, Research-based policy analysis and commentary from leading economists, March 6, 2009, Available at SSRN: https://ssrn.com/abstract=2492949