Do We Need New Modelling Approaches in Macroeconomics?

Arbeitspapier

The economic and financial crisis that emerged in 2008 also initiated an intense discussion on macroeconomic research and the role of economists in society. The debate focuses on three main issues. Firstly, it is argued that economists failed to predict the crisis and to design early warning systems. Secondly, it is claimed that economists use models of the macroeconomy which fail to integrate financial markets and which are inadequate to model large economic crises. Thirdly, the issue has been raised that economists invoke unrealistic assumptions concerning human behaviour by assuming that all agents are self-centred, rationally optimizing individuals. In this paper, we focus on the first two issues. Overall, our thrust is that the above statements are a caricature of modern economic theory and empirics. A rich field of research developed already before the crisis and picked up shortcomings of previous models.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IWH Discussion Papers ; No. 8/2014

Classification and Topics

• Classification: Wirtschaft
• Subject: financial crisis ; economic forecasting and early warning systems ; macroeconomic modelling

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Buch, Claudia M. ; Holtemöller, Oliver
• Event: Veröffentlichung
• (who): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (where): Halle (Saale)
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/98744
• URN: urn:nbn:de:gbv:3:2-30820
• Last update: 10.03.2025, 11:45 AM CET