In a new article for Project Syndicate, entitled What Economists Still Need To Learn , I argue that conventional macroeconomic models failed to predict, explain, or offer remedies for the global financial crisis. Yet a decade later, much of the profession remains in denial and treats the crisis as just a rude interruption.
I group the crucial lessons that macroeconomists need to learn into three main categories:
- economies are not self-correcting.
- balance sheets matter.
- distribution matters.
While some academic economists are making progress with more heterodox approaches, their insights have had little impact on the forecasting models still being used by practitioners in the policy-making and corporate world. Meanwhile, the global backlash against the economic and political status quo is changing the game while it is still being played. As talk of a global recession begins to grow, it’s worrying that macro-economists still have no clear idea what to do about it…
Mark Cliffe 