Rethinking Macroeconomics

Abstract

The crash of 2008 exposed deep failures at the core of macroeconomic policymaking and macroeconomic thinking in the United States. The crisis's rapid spread from its epicenter on Wall Street to nearly the entire world underscored the interconnectedness of the global economy. The American purveyors of the ancien régime hope that a few superficial fixes will get us back on our way. This is not to be. Sustained and widespread future prosperity will require basic reforms in global macroeconomic governance and in macroeconomic science. Such reforms are never easy, as they require new ways of thinking. Yet business as usual could prove calamitous. This essay describes the reform path.