The Current Economic Crisis: Its Nature and the Course of Academic Economics

Abstract

The current crisis has triggered significant debate concerning economic theory and policy. Largely absent from this debate is an informed discussion of the methods used by economists in analysing the economy and formulating their proposals. But method matters. Here I argue that current academic research practices need to be transformed before real insight can be achieved. Specifically, I indicate why and how a more grounded framework than that presupposed by current research practices facilitates a potentially more fruitful approach to understanding the crisis.

Keywords: Economic crisis, Economists, Mathematical deductivist methods, Ontology, Asset backed securities, Collateralised debt obligations, Keynesianism

JEL Classification: A1, A2, A3, B3, B4, B5, G0, G1, G2, N0, N1, N2, P0