World Economy, Economic Science, and Economic Policy: What Comes After the Crisis

Abstract

The contribution analyzes the current discussions on the state of economics with special focus on interrelationships between key ideas of economic theories and real actions of economic policy in the course of the global economic crisis. The global economic crisis showed the limited ability of mainstream in economics, primarily in new macroeconomics and financial economics, the practice of economic policies, and therefore, the attention of researchers and economic policy-makers was drawn again to some alternative views in economics, related to the uncertain nature of economic development and the complexity of expectation formation and decision-making of economic agents with relevant implications for public policy. Section 1 compares the policy responses to Great Depression and Great Recession and documents the divergence of actual policies and neoclassical vision in both cases. Section 2 traces the retreat and renaissance of the neoclassical vision in the XX century but tries to argue that principal weaknesses are not overcome in the course of development of DSGE models. Section 3 offers the brief outline theoretical concepts beyond mainstream which might be fruitful for further research and macroeconomic policy formulation. Finally, Sect. 4 concludes the research.