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03: Economic theory and economic policy in crisis?

Seminar / Seminar
english language

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
Senior Member, St Antony's College, Oxford


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

Director, Tonsut Properties, Learil Enterprises, P.E. Clothing Bachelor of Business Science (Economics), University of Cape Town, South Africa M.Sc. London School of Economics and Political Science International Monetary Fund Guest Scholar, The Brookings Institution Professorial Lecturer, School of Advanced International Studies, The Johns Hopkins University Ph.D. University of London Deputy Director, Policy Development and Review Director, International Monetary Fund, 2009 Chairman of the Board, Joint Vienna Institute
since 1974
since 2003


Director, Flassbeck-Economics, Wolfersweiler

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


Senior Member, St Antony's College, Oxford

BA, Economics, Mount Holyoke College Economics, International Relations coursework toward Mount Holyoke Degree, Institut de Hautes Etudes Internationales, Geneva M.Sc. Economics, International Trade and Open Economy Macroeconomics specialization, London School of Economics International Economist, Office of Assistant Secretary for International Affairs, US Treasury Research Department, Specialization in Financial Markets, Economics of Emerging Market Countries, International Monetary Fund Chief of Operations in India, Thailand, Singapore, Asian Department, International Monetary Fund Visiting Fellow, International Food Policy Research Institute Oversight of IMF lending Operations (Russia, other CIS countries, Turkey, South Africa), Policy Development and Review Department, International Monetary Fund Adjunct Professor, Economics Department, Georgetown University
  Economist/researcher: Japan, Thailand, Korea
  Chief, Ex Post Evaluation of IMF lending to low, middle-income countries
  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

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Kategorie: all Plenary Seminar
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