The deep crisis of macroeconomics

A great article on the New York Times by Paul Krugman: How did economists get it so wrong?

It starts with a very short history of economy from Smith to Keynes and the last developments in macroeconomy with the Saltwater (pro-Keynes) and Freshwater(anti-Keynes) schools of thinking.
At last, a summary of how little clue had every economist about the incoming 2008 crisis, the USA house bubble and which measures are appropriate against the new recession, with old ideas and theories forgotten or misused.

His conclusion is that the state of macroeconomy is not good.

And he suggests that the economy should re-think many of its dogmas, first of all the efficient-market hypothesis and that investors are rational and finally re-embrace Keynes.

In Krugman’s own words “Many economists will find these changes deeply disturbing.”

In the “Kritik der reinen Vernunft”  Kant denies that rationalist metaphysics can be accepted as a perfect science like mathematics.  He wrote “I had to abolish knowledge in order to make room for faith”.

Reading the article, I can only think one thing: is economics really an exact science?

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One thought on “The deep crisis of macroeconomics

  1. Pingback: Why the Reinhart-Rogoff affair is actually good news. | Look back in respect

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