Great Leap Forward

Why is Paul Krugman Frustrated with Heterodoxy?

The blog-O-sphere has been lit up in recent days with Krugman’s announcement that he’s frustrated by the gloating of Heterodox Economists. He claims that with good hindsight, all the mainstream economists who “never saw the crisis coming” can use their flawed textbook approach to explain what happened. Gee, that makes me feel a lot better! So we don’t need to listen to those heterodox types who actually saw it coming, any more. Forget Minsky! Go back to ISLM models! Models that do not have banks–let alone shadow banks–or the potential for financial crises.

Stephanie Kelton led a podcast on the topic:

Mon, 28 April 2014

                        Randy Wray on Krugman and the Frustration of the Heterodox

A broad-ranging discussion of conventional economics and the heterodox alternatives to IS/LM, Ricardian equivalence, etc.

If the link does not work, go to her site:

And if that does not work, look on the RHSidebar at NEP:

I’ll try to write a longer piece if I get time in the next few days.

One Response to “Why is Paul Krugman Frustrated with Heterodoxy?”

available1May 27th, 2014 at 11:01 am

You seemed sceptical on the issue of a "savings glut" could you elucidate on what this is and why your sceptical? Thanks.

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Richard Wood Richard Wood

Richard has published papers on wages policy, the taxation of financial arrangements and macroeconomic issues in Pacific island countries. Views expressed in these articles are his own and may not be shared by his employing agency. He is the author of How to Solve the European Economic Crisis: Challenging orthodoxy and creating new policy paradigms