Friday, September 04, 2009

How Did Economists Get It So Wrong?

Lengthy Paul Krugman article, How Did Economists Get It So Wrong? is really a lesson in Macroeconomics.

Brad DeLong comments on it here and here.

2 comments:

Anonymous said...

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Anonymous said...

Economists got it wrong and continue to get it wrong because the root cause of the global financial meltdown was Control Fraud executed on a massive scale by the senior managment of the mortgage underwriters, commercial banks and investment banks.

As there is no variable for criminal activity in any macroeconic equation that I am aware of, any attempt to have predicted in advance the meltdown, would have been difficult to impossible using pure economic theory. It is also why even post mortem, economists still seem to disagree about what happened and why.

I believe that unless Krugman (and other "economists") decides to admit that outright fraud and manipulation was at the core of the mortgage mess, not he, nor any economist, will ever be able to fully explain what happened.

TT