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Why ‘state of the art’ monetary theory was unable to anticipate the global financial crisis: a child's guide

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  • Colin Rogers

    (University of Adelaide, Australia)

Abstract

‘State of the art’ monetary theory was unable to anticipate or understand the global financial crisis because it rested on microeconomic foundations that precluded any meaningful role for money, finance or banking. These analytical and conceptual flaws have been known for a long time. But many either ignored or misunderstood their implications. This note provides a largely non-technical explanation of the conceptual flaws in ‘state of the art’ monetary theory that rendered it unable to anticipate, or understand, the global financial crisis of 2007–2008; and rendered it thereafter effectively useless as a guide to what should be done.

Suggested Citation

  • Colin Rogers, 2014. "Why ‘state of the art’ monetary theory was unable to anticipate the global financial crisis: a child's guide," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(3), pages 300-314, December.
    • Handle: RePEc:elg:ejeepi:v:11:y:2014:i:3:p300-314
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    Cited by:

    1. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.

    More about this item

    Keywords

    time-0 auction; money-less Walrasian-Arrow-Debreu models;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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