Director’s Cut: Post-crisis prognosis for macroeconomics
The global financial crisis prompted the field of macroeconomics to rethink its methods. In this Director's Cut of 'The Sound of Economics', Bruegel deputy director Maria Demertzis addresses the changes made and the problems still unresolved, in conversation with Nicola Viegi, South African Reserve Bank professor of monetary economics at the University of Pretoria, and Frank Smets, director general of economics at the European Central Bank.
The global financial crisis exposed flaws in the methods and theories of macroeconomics. Certain aspects of the crisis were completely unexpected; other burgeoning problems were flagged up but explained away, and thus allowed to get worse.
As the profession seeks to reinvent itself post-crisis and reassert its worth, what exactly has been learned and what changes have been made to the practice of macroeconomics? New models appear to be flourishing, but debate continues over whether we have improved our understanding and mitigated the potential for misreading the results that these models present.
In this Director’s Cut of ‘The Sound of Economics’ podcast, Bruegel deputy director hosts a conversation with Nicola Viegi, South African Reserve Bank professor of monetary economics at the University of Pretoria, and Frank Smets, director general of economics at the European Central Bank.
For further reading on this topic, consider our overview of the ‘Rebuilding Macroeconomic Theory Project’ recently concluded by the Oxford Review of Economic Policy, written by Konstantinos Efstathiou.