Friday, September 11, 2009

Which economists got it wrong?

Gregory Mankiw’s most recent blog post is “How did economists get it so wrong?” with a link to an answer by Barry Eichengreen. Paul Krugman had a long essay on the topic in last weeks Sunday New York Times. A group of British economists even felt the need to respond when the Queen asked the question. I am getting tired of the question for several reasons. First, many economists were pointing to problems before the recession began. Robert Shiller, Nouriel Roubini, Raghuram Rajan would just be the start of the list. Krugman himself wrote a book titled The Return of Depression Economics. How much warning do people need. Does every economist have to stand up and shout at the same time?

Second, who are the economists who got it wrong. Who is the Irving Fisher of our time?

Third, its not clear that it would have made a difference if all economists had shouted at the same time. Since when did policy makers start doing what economists say. If policymakers listened to economists we wouldn’t have tariffs, quotas, or agricultural price supports.

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