June 2009 Paper: “No One Saw This Coming” – by Dirk Bezemer

This paper was mentioned in Steve Keen’s new and expanded edition of Debunking Economics, which comes out in October in the U.S. I was fortunate enough to receive an advanced proof of the book, which is one that I think is going to be very important for both investors and non-investors alike. I’ll have more on the book as I get a little further along.

This paper presents evidence that accounting (or flow-of-fund) macroeconomic models helped anticipate the credit crisis and economic recession. Equilibrium models ubiquitous in mainstream policy and research did not. This study identifies core differences, traces their intellectual pedigrees, and includes case studies of both types of models. It so provides constructive recommendations on revising methods of financial stability assessment. Overall, the paper is a plea for research into the link between accounting concepts and practices and macro economic outcomes.

………………..

Related book: Debunking Economics - Revised and Expanded Edition: The Naked Emperor Dethroned?

Related link: Steve Keen’s Debtwatch