Reconstructing Economics in Light of the 2007-? Financial Crisis

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Reconstructing Economics in Light of the 2007-? Financial Crisis

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Title: Reconstructing Economics in Light of the 2007-? Financial Crisis
Author: Friedman, Benjamin Morton
Citation: Friedman, Benjamin M. 2011. Reconstructing Economics in Light of the 2007-? Financial Crisis. Journal of Economic Education 41(4): 391-397.
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Abstract: The lessons learned from the recent financial crisis should significantly reshape the economics profession's thinking, including, importantly, what we teach our students. Five such lessons are that we live in a monetary economy and therefore aggregate demand and policies that affect aggregate demand are determinants of real economic outcomes; that what actually matters for this purpose is not money but the volume, availability, and price of credit; that the fact that most lending is done by financial institutions matters as well; that the prices set in our financial markets do not always exhibit the “rationality” economists normally claim for them; and that both frictions and the uneven impact of economic events prevent us from adapting to disturbances in the way textbook economics suggests.
Published Version: doi:10.1080/00220485.2010.510397
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:5241348

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  • FAS Scholarly Articles [7219]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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