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
Date Written: March 6, 2009
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
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