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03: Economic theory and economic policy in crisis?

Seminar / Seminar
in englischer Sprache

For the most part, economists did not foresee or propose measures that would have lessened the damage from the 2008-09 financial crisis. The seminar intends to review this failure, consider explanations of the causes of the crisis, ways to improve economic analysis, and to avoid future crises.

Most observers fault one or a combination of regulatory failures, global imbalances, or excessively loose monetary policies for the crash: which of these stands up to scrutiny? Why did economists not anticipate the effects of these shortcomings? Was this simply a case of economists being blindsided by a „This time is different“ mentality in the face of asset price bubbles or was there too much emphasis on a micro approach focusing on the behaviour of one representative household to understand global financial markets and economic development?

How should the underlying approach to economic analysis change in light of the experi-ence during the crisis? One approach, proposed by Akerlof and others, is to drop some assumptions of rationality implicit in the behaviour of the famous homo oeconomicus and to replace the rationality paradigm by a descriptive behavioural paradigm based on interdisciplinary research. Another option, proposed by Keynesian economists, is to re-turn to an analysis based on macroeconomic logic instead of one based on micro-logic without dropping the rationality assumption to the full.

Many policy and institutional challenges lie ahead. What does the crisis tell us about the main challenges to regulatory changes-are they more to address primitive herding, in-centives for excessive risk-taking, or excessively sophisticated financial instruments and practices? While the crisis originated in high-income countries, it ultimately had a global reach: should policy changes be driven primarily by national agendas and preferences or should global institutions and coordination play a larger role?

The main topics of the seminar are:

– The search for the root causes of the financial crisis
– The lessons to be drawn by economists of different schools of thought
– The lessons to be drawn by economic policy makers at the national level, including the analysis of different policy challenges in high income, emerg-ing market and low income countries
– The lessons to be drawn for global governance


Director, International Monetary Fund Institute, Washington, D.C.
Director, Flassbeck-Economics, Wolfersweiler Chair
Senior Member, St Antony's College, Oxford Chair


Director, International Monetary Fund Institute, Washington, D.C.

1969-1973 Director, Tonsut Properties, Learil Enterprises, P.E. Clothing
1972 Bachelor of Business Science (Economics), University of Cape Town, South Africa
1974 M.Sc. London School of Economics and Political Science
since 1974 International Monetary Fund
1983-1984 Guest Scholar, The Brookings Institution
1983-1985 Professorial Lecturer, School of Advanced International Studies, The Johns Hopkins University
1984 Ph.D. University of London
1998-2003 Deputy Director, Policy Development and Review
since 2003 Director, International Monetary Fund
2006, 2009 Chairman of the Board, Joint Vienna Institute
2006-2007 Co-Chairman, IMF Taskforce on Integrating Finance and Financial Sector Analysis into Surveillance


Director, Flassbeck-Economics, Wolfersweiler

1971-1976 Studies, Economics, University of the Saarland
1976-1980 German Council of Economic Experts, Wiesbaden
1980-1986 Federal Ministry of Economics, Bonn
1980-1984 Division for basic issues of German and European economic policy, concentrating on "European economic policy"
1984-1985 Permanent Representation of the Federal Republic of Germany to the International Organisations in Geneva
1986-1990 Studies, German Institute for Economic Research (DIW)
1987 Dr., Free University Berlin
1986-1988 Temporary Lecturer, College for Higher Professional Training in Economics, Berlin
1990-1998 Head, Business Cycles Department, German Institute for Economic Research
1993-1999 Economic Adviser, Government of Kazakstan
1996 Visiting Fellow, Massachusetts Institute of Technology MIT, Cambridge
1998-1999 State Secretary (Vice Minister), Federal Ministry of Finance, Bonn
1999-2000 Publicist and Consultant
2000-2002 Senior Economist, UNACTAD-United Nations Conference on Trade and Development, Geneva
since 2003 Chief, Macroeconomic and Development Policies Branch, UNACTAD-United Nations Conference on Trade and Development, Geneva
since 2003 Director, Division on Globalization and Development Strategies, UNACTAD-United Nations Conference on Trade and Development, Geneva
2005 Appointed Honorary Professor, Hamburg University for Economics and Politics


Senior Member, St Antony's College, Oxford

1969-1973 BA, Economics, Mount Holyoke College
1971-1972 Economics, International Relations coursework toward Mount Holyoke Degree, Institut de Hautes Etudes Internationales, Geneva
1973-1974 M.Sc. Economics, International Trade and Open Economy Macroeconomics specialization, London School of Economics
1974-1975 International Economist, Office of Assistant Secretary for International Affairs, US Treasury
1976-1981 Research Department, Specialization in Financial Markets, Economics of Emerging Market Countries, International Monetary Fund
  Economist/researcher: Japan, Thailand, Korea
1981-1991 Chief of Operations in India, Thailand, Singapore, Asian Department, International Monetary Fund
1988-1999 Visiting Fellow, International Food Policy Research Institute
  Chief, Ex Post Evaluation of IMF lending to low, middle-income countries
1991-1998 Oversight of IMF lending Operations (Russia, other CIS countries, Turkey, South Africa), Policy Development and Review Department, International Monetary Fund
1999 Adjunct Professor, Economics Department, Georgetown University
  Head of Research Projects: Europe in Global Economy, Economic Choices of new EU Members
 current Senior Member, St. Antony´ s College, Oxford
  Asian Development Bank Institute, Independent Evaluation Office of the IMF National Bank of Poland
1999-2007 Deputy Director, European Department, International Monetary Fund, Lead IMF oversight of Turkey, UK, Central-Eastern Europe


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