Financial Instability Revisited: The Economics of Disaster

JEL codes: A22, G01How should the recent financial crisis, which has not only imposed such huge costs on the U.S. economy (and on U.S. taxpayers) but also contradicted so many central "truths" of modern economics, change how we teach our subject? What should we be telling our students, in introductory economics courses as well as in macroeconomics courses at all levels, that we are not now telling them? More generally, what lessons should we draw for how we as economists should think about the world we are trying to analyze, and about what economic policies might make it into a better place? PROPOSITION #1: WE LIVE IN A MONETARY ECONOMY, AND IT MATTERSOur first need is to recognize, much more explicitly than we now do, that we live in a monetary economy and it matters. At one level, of course, everyone knows this. But sometimes it seems as if education in our profession is aimed at persuading our students that what happens within the monetary and financial aspects of our economy has little or nothing to do with output, or employment, or ordinary people's incomes. This idea is both wrong and subversive of our ability to understand phenomena like what we have just experienced.

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Post-socialist financial fragility: the case of Albania

Bezemer¹

2001

Cambridge Journal of Economics

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Financial Instability Revisited: The Economics of Disaster

Cited by 11 publications

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Reconstructing Economics in Light of the 2007–? Financial Crisis

Post-socialist financial fragility: the case of Albania

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