Theoretical Controversies: Economists Dealing with the Great Recession and Its Impact on Macroeconomics

Roberto Marchionatti ()
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Roberto Marchionatti: University of Turin, Campus “Luigi Einaudi”, Department of Economics and Statistics

Chapter Chapter 6 in Economic Theory in the Twentieth Century, An Intellectual History—Volume IV, 2025, pp 195-220 from Springer

Abstract: Abstract The chapter deals with the major controversy of the period on the nature of the 2007–2008 Great Recession, which sparked a sharp divide between neoclassical and non-neoclassical economists. Firstly, the chapter analyzes the neoclassical interpretation of the crisis, with particular attention to the comprehensive account provided by Michael Wickens, as well as Robert Lucas’s reflections on the limitations of the new neoclassical models in explaining certain financial crises. Secondly, the chapter examines alternative interpretations of the crisis offered by non-neoclassical economists—grounded in Keynesian frameworks, complexity economics, and behavioral economics. Special attention is given to the alternative contributions of Paul Krugman, Joseph Stiglitz, and Alan Kirman, whose critiques have highlighted the theoretical and interpretative shortcoming of neoclassical approaches.

Keywords: Great recession; Neoclassical interpretations; M. Wickens; R. Lucas; DSGE approach; R. Posner; Keynesian interpretations; P. Krugman; The return of depression economics; J. Stiglitz; Standard model’s failure; A. Kirman; Complexity economics interpretation; Economic crisis and crisis of economic theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-06201-7_6

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DOI: 10.1007/978-3-032-06201-7_6

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