After the Bust: The Outlook for Macroeconomics & Macroeconomic Policy

Thomas Palley

No 20-2008, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: The current economic crisis offers an historic opportunity for change. The depth of the crisis means there will likely be a policy turn in a Keynesian and even Post Keynesian direction. However, there are profound political, intellectual and sociological obstacles blocking change in underlying economic thinking. In particular, the economics profession and its ideology remain unreformed, with little indication of change regarding core understandings concerning labor markets, globalization, and the theory of the natural rate of unemployment. The only place where there is evidence of substantive intellectual change is attitudes toward financial regulation. These obstacles will mute the policy response to the crisis, and if a deep crisis is averted will tend to encourage a return of the existing policies that have failed so disastrously.

Keywords: Crisis; macroeconomic policy; mainstream economics. (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008
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Citations: View citations in EconPapers (1)

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