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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Håvard Halland Håvard Halland

PHåvard Halland is a natural resource economist at the World Bank, where he leads research and policy agendas in the fields of resource-backed infrastructure finance, sovereign wealth fund policy, extractive industries revenue management, and public financial management for the extractive industries sector. Prior to joining the World Bank, he was a delegate and program manager for the International Committee of the Red Cross (ICRC) in the Democratic Republic of the Congo and Colombia. He earned a PhD in economics from the University of Cambridge.