An Agenda for Reforming Economic Theory

In this article, Nobel Prize Laureate Joseph Stiglitz argues that the standard macro-economic paradigm has failed not only to predict the crisis but also to provide insights into the design of a regulatory framework that would make a recurrence less likely. He points out that many of the underlying...

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Bibliographic Details
Published inFrontiers of economics in China Vol. 14; no. 2; pp. 149 - 167
Main Author Stiglitz, Joseph E
Format Journal Article
LanguageEnglish
Published Beijing Higher Education Press 01.06.2019
Higher Education Press Limited Company
Subjects
Behavior
Constituents
Economic aspects
Economic behavior
Economic fluctuations
Economic theory
Financial crises
Households
macro-economic models
market failures
Microeconomics
Nobel laureates
Nobel prizes
Recurrence
regulatory framework
Stiglitz, Joseph E
Studies
systemic risk
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Summary:In this article, Nobel Prize Laureate Joseph Stiglitz argues that the standard macro-economic paradigm has failed not only to predict the crisis but also to provide insights into the design of a regulatory framework that would make a recurrence less likely. He points out that many of the underlying assumptions of the standard paradigm always seemed implausible and many of its predictions, such as those concerning the micro-economic behavior of the constituents (firms and households), are inconsistent with the empirical evidence. He then identifies a number of key modeling challenges, what he views as key ingredients that have to be incorporated in any model that is going to describe economic fluctuations or be the basis of a well-designed regulatory or monetary framework.
Bibliography:systemic risk
regulatory framework
market failures
macro-economic models
financial crises
ISSN:1673-3444
1673-3568
DOI:10.3868/s060-008-019-0009-3