Econintersect: Nobel Laureate Joseph Stiglitz has continued to speak out on the shortcomings of economic theory with regard to understanding how the economy actually works. He has been addressing this theme since at least 1988 (see NBER Source) when he published a transactions based approach to monetary theory which criticized the conventional view using the Hicks IS-LM model which treated money as exogenous to macroeconomic operations.
Ignorance is not the exact term ever used by Prof. Stiglitz but it is a logical inference. He won a Nobel Prize in Economics (2001) and is still pursuing the same theme from the 1980s but seems to have had little influence on many of his colleagues who continue to protest that there is no need to include banking operations in macroeconomic models. (See Dirk Ehnts, GEI Opinion, 01 April 2012). The following is a seven-minute excerpt from a lecture presented on 04 January 2013 entitled “What is Wrong With Economics.”
The complete lecture was presented in a GEI News article in January.
Sources:
- Banks as Social Accountants and Screening Devices for the Allocation of Credit (Joseph E. Stiglitz, NBER Working Paper No. 2710, September 1988)
- The Lessons of the North Atlantic Crisis for Economic Theory and Policy (Joseph E. Stiglitz, IMF Direct, 03 May 2013)
- Two Views of Money: Krugman and Keen (Dirk Ehnts, GEI Opinion, 01 April 2012)
- Krugman Doesn’t Understand IS-LM, Part 1 (Steve Keen, GEI Analysis, 15 March 2013) Follow links available to other articles, including Part 2.
- The Great Debate©: Keen and Krugman on Money and Banking (Steve Keen, GEI Analysis, 09 April 2013)
- Stiglitz: What is Wrong With Economics? (GEI News, 21 January 2013)