There is a long list of culprits when it comes to assigning blame for the financial crisis. This column argues economists are among the guilty, having succumbed to an intellectual virus of theory-induced blindness. It adds this calls for an intellectual reinvestment in models of heterogeneous, interacting agents, following in the footsteps of other social scientists. This will require a sense of academic adventure sadly absent in the pre-crisis period.VOX
What have the economists ever done for us?
Andrew G Haldane | Executive Director, Financial Stability, Bank of England
Way important. Andy Haldane is going to be with us for awhile and he is just beginning to hit his stride. Here he takes economists to the woodshed.
Quite brilliant on one level, and rather damning, but nothing new for readers here.
Moreover, Andy leaves out a few things that are highly relevant, like Godley's sectoral balance approach — developed while he was at Treasury. It's curious that this is still ignored, since Godley went on to become one of the "Six Wise Men" of British Treasury's Panel of Independent Forecasters.