Abstract
The blame for the recent financial crisis has been attributed to modern macroeconomic theory rather than banking and finance. This article defends modern macroeconomics against its critics arguing that the critics have missed the point of why macroeconomics is carried out in the way it is. It also defends finance from some criticisms, especially of the efficient markets hypothesis. It is claimed that, far from being in a state of crisis as a result of recent events, modern macroeconomics has received a huge stimulus, and that the financial crisis was brought about more by a failure to employ modern macroeconomics than by the failings of macroeconomics. (JEL code: E00).
| Original language | English |
|---|---|
| Article number | ifq015 |
| Pages (from-to) | 536-553 |
| Number of pages | 18 |
| Journal | CESifo Economic Studies |
| Volume | 56 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Dec 2010 |