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Competitio

Vol. 9 No. 2 (2010)
Papers

Financial Crisis, Economic Policy and Economics

Published:
2010-12-13
DOI Linkhttps://doi.org/10.21845/comp/2010/2/2
Author
Jozsef Moczar
Keywords
financial crisis efficient money market macroeconomics monetary and fiscal policy mathematical economics financial mathematics
How To Cite
Selected Style: APA
Moczar, J. (2010). Financial Crisis, Economic Policy and Economics. Competitio, 9(2), 19-34. https://doi.org/10.21845/comp/2010/2/2
Abstract

Concerning the financial crisis in 2007-2009 many politicians and economists, in addition
to representatives of other disciplines have asked: why could it not have been avoided,
why could it not have been forecast? The present paper provides a new answer to these
questions. The main argument is that empirical economic policy reached a deadlock when
economists acknowledged the equilibrium models based on efficient market theory. The
static equilibrium paradigm which appeared in the middle of last century has strongly
prevailed to the present day, leaving aside Kornai’s (1971) or Benassy’s (1982) or Goodwin’s
(1991) warnings. Since the economy is never in equilibrium the simultaneous equations
describing it may not provide any guide for politicians; what they should do and how they
should do it in a time of economic crisis. The present author’s newest book (Móczár, 2008),
besides the dynamic equilibrium, also sketches a new paradigm, i.e., non equilibrium
modelling, instead of the orthodox equilibrium paradigm, which allows us to treat bubbles,
to regulate money markets etc. Its necessity is outlined here.

JEL classification: E00, E5, E6, G28 

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