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Title:The financial crisis and the systemic failure of academic economics PDF Logo
Authors:Colander, David C.
Föllmer, Hans
Haas, Armin
Goldberg, Michael
Kirman, Alan
Jusélius, Katarina
Lux, Thomas
Sloth, Brigitte
Issue Date:2009
Citation:[Series:] Kiel working paper [No.:] 1489 [Editor:] Kiel Inst. for the World Economy, Kiel
Series/Report no.:Kiel working paper 1489
Abstract:The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession's insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.
Subjects:Financial crisis
academic moral hazard
ethic responsibility of researchers
JEL:A11
B40
G01
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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