What Should Be Taught About the Financial Crisis?

John B. Taylor remarks:

If you think that it shows our economic theory—especially our macroeconomic theory—was wrong, and thereby gave the wrong policy prescriptions, then you have to think about massive changes. If you think the crisis shows that our economics was basically correct and that policy deviated from the recommendation of the theory, then you want to revise the text differently, and show with example after example how this happened. It is a unique teaching moment.

See especially his presentation for an upcoming economics teachers’ convention.

4 comments… add one
  • The first link is to your cite Dave.

  • Thanks. Fixed.

  • Ben Wolf

    What should be taught is that neo-liberal economic theory has the dubious distinction of being entirely responsible for the mess. A school of thought which doesn’t acknowledge bubbles or involuntary unemployment, its adherents continue to make excuses for the failure of their models and are a classic case study in ideological blindness.

  • Which economists belong to that school of thought Ben?

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