Rethinking macroeconomic theory before the next crisis

Marc Lavoie

Post-Print from HAL

Abstract: Misguided economics policies relying on an unrealistic macroeconomic theory that denied the possibility of a crisis are at the origins of the Global Financial Crisis. The goal of the present paper is to recall how the end of the Great Moderation has been interpreted by the advocates of mainstream economics, and how they have questioned their own macroeconomic theories as a consequence of what happened during and after the financial crisis. There is thus a need to reconsider most aspects of mainstream theory. In particular, the crisis has once more demonstrated that potential output is influenced by aggregate demand – a phenomenon associated with hysteresis which also questions concepts such as the natural rate of interest and crowding-out effects.

Keywords: potential output; financial crisis; hysteresis; DSGE models (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Published in Review of Keynesian Economics, 2017, 6 (1), pp.1-21. ⟨10.4337/roke.2018.01.01⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Rethinking macroeconomic theory before the next crisis (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01435723

DOI: 10.4337/roke.2018.01.01

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().