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The Crisis of Economics

  • Mauro Gallegati
Chapter
Part of the New Economic Windows book series (NEW)

Abstract

Economics is navigating in troubled waters. And even if a mainstream approach does exist, theoretical solidity and the ability to explain the empirical evidence are obviously increasingly fragile and challenged. “When the crisis came—recalls the former Governor of the ECB, Jean-Paul Trichet 2010—the serious limitations of existing economic and financial models became immediately apparent. Arbitrage broke down in many market segments, as markets froze and market participants were gripped by panic. Macro models failed to predict the crisis and seemed incapable of explaining what was happening to the economy in a convincing manner. As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools.”

Keywords

DSGE and general equilibrium Falsifiability Axiomatic economics 

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Copyright information

© Springer Nature Switzerland AG 2018

Authors and Affiliations

  • Mauro Gallegati
    • 1
  1. 1.Università Politecnica delle MarcheAnconaItaly

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