Potential Growth: Economic Policy in the Kingdom of the Blind

Résumé 0

The 2009 crisis has shed a crude light on the deep shortcomings of standard macroeconomic theory and of its representation of the workings of macroeconomic policy.The analytical framework in which most macroeconomists reason, the one that guides national, European, and international institutions’ orientations, is intrinsically unable to deliver insights on the structural evolutions of economies that are massively intertwined with finance and in perpetual technological change. The key concepts on which this framework is built lead to the choice of indicators that generate misleading signals.Standard macroeconomic aggregates guiding economic policies have been losing their meaning, but continue to be relied upon when forming a diagnosis on national economies.Rebuilding macroeconomic theory on new foundations is urgent; but the avenues that are currently being explored are far from providing adequate answers.Classification JEL : E00, E01, E60.