Must-Read: Mark Thoma: Reform and Revolution in Macroeconomics

Must-Read: Mark Thoma: Reform and Revolution in Macroeconomics): “With respect to the failure… to ask the right questions prior to the crisis…

…There was no shortage of tools…. The problem was that we had been told by the eminent thought leader(s) within the profession that the problem of deep recessions had been solved (if not by policy, then by the improvement in the operation of the economy brought about by modern technology… especially financial markets with their digital technology and physics brains). Thus, theoretical questions about deep recessions induced by financial panics were ignored or shunted off to the side…. It was a combination of the belief that the questions were unimportant combined with sociology within the profession that placed a lower value on pursuits that might have allowed us to be better prepared when the recession hit…