More on post-GFC economics

I posted last week on how the current crisis had challenged both economics and economists. My colleague Steve Grenville has a piece in today’s Australian Financial Review on the same subject which among other things reviews the damage the ‘efficient markets hypothesis’ wreaked on prudential regulation. Also worth a look in the context of this debate is the review by Benjamin Friedman of a new book by Akerlof and Shiller which attempts to promote a new model for macroeconomics by drawing on the lessons of behavioural economics.

Finally, in my original post I missed this great rant on the (ir)relevance of macro theory from economic historian Greg Clark (h/t John Quiggin’s blog) which keys off from the important question: ‘Where is my money, idiot?’