"But what became clear in the policy debate after the 2008 crisis was that many economists — including many macroeconomists — don’t know
the simplest multiplier analysis. They literally know nothing about
models in which aggregate demand can be determined by more than the
quantity of money. I’m not saying that they have looked into such models
and rejected them; they are unaware that it's even possible to tell a
logically consistent Keynesian story. We’ve entered a Dark Age of
macroeconomics, in which much of the profession has lost its former
knowledge, just as barbarian Europe had lost the knowledge of the Greeks
and Romans.
"As long as monetary policy could bear
the burden of macroeconomic stabilization, this didn’t seem to matter
too much: even as equilibrium business cycle theory became increasingly
dominant in graduate study, central banks, like medieval monasteries,
kept the old learning alive. But once we were hit with such a severe
banking and balance sheet crisis that monetary policy hit the zero lower
bound, it was crucial that the economics profession be able to weigh in
knowledgeably and coherently on other possible actions. And it turned
out that it couldn’t."
--Paul Krugman, from his Presidential Address to the Eastern Economic Association, "The Profession and the Crisis," in Eastern Economic Journal (2011) 37, 307–312. doi:10.1057/eej.2011.8.
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