Some Foundational and Transformative Grand Challenges in Economics

11 Pages Posted: 12 Aug 2011  

Martin N. Baily

Brookings Institution

Date Written: 2010

Abstract

The following are foundational and transformative challenges for economists: • There is no generally accepted theory of macroeconomics that is adequate to respond to the challenges thrown up by the financial crisis and resulting deep and persistent recession; • Most young people in the United States will not complete a two or four year college degree and most of them will end up in jobs that do not pay well. How can we structure the US education and training system so that it provides the skills that young people need to earn middle class wages? • What is the value of work and how does it change with age? • How are innovation, productivity and employment being affected by globalization and the rise of new economic powers? • There is a wide variation in the cost of treating any given disease, depending on the hospital or region where it is treated. There is a similar large variation across advanced economies in health care costs. There seems to be little or no relation between the cost of treatment and the effectiveness of the treatment. How can this be? How can this result be utilized to improve the quality and reduce the cost of the US health care system? • Can evolutionary economics provide new insights into areas where conventional economics has proven inadequate?

Suggested Citation

Baily, Martin N., Some Foundational and Transformative Grand Challenges in Economics (2010). American Economic Association, Ten Years and Beyond: Economists Answer NSF's Call for Long-Term Research Agendas. Available at SSRN: https://ssrn.com/abstract=1888518 or http://dx.doi.org/10.2139/ssrn.1888518

Martin N. Baily (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

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