After the bust: The outlook for macroeconomics and Macroeconomic policy

This chapter explores how the 2008 economic crisis offered an historic opportunity for change. The depth of the crisis strengthened demand for a policy turn in a Keynesian and even Post Keynesian direction. However, profound political, intellectual and sociological obstacles also blocked change. In particular, the economics profession and its ideology remain unreformed, with little evidence of change regarding core theoretical and policy understandings. Among mainstream economists, the only area where there is evidence of substantive intellectual change is in attitudes toward financial regulation. Those obstacles contributed to muting the policy response to the crisis. The paper also predicted that once the crisis was contained, the lack of intellectual reform would encourage a return to the existing policy model even though it had failed so disastrously.