New Economics

Obregon, Carlos (2020): New Economics. Published in:

Abstract

None of the known macroeconomic theories are adequate to understand what to do in a global crisis like the 2020 Global Pandemic. Rational Expectations and monetarism cannot even ex-plain how is that a global crisis like this happens. The IS-LM model was designed to manage business cycles, but not to confront major crises. And Keynes economics was written many years ago, based in volatile investors expectations that do not describe the present situation. There is a need of a new economic theory. The main problem of traditional economy is that it has not taken seriously the need to explore the characteristics that the institutional arrangement must have for markets to operate properly. The idea that free markets work by themselves, have perniciously enter into microeconomics, macroeconomics and economic growth theory. And as a consequence we do not have today solid microeconomic foundations for the re-quired macroeconomic policies to confront major crises; and neither for adequate models of economic growth for the world at large, nor for underdeveloped economies. We need a new economic theory. The main purpose of this manuscript is to delineate the route towards the consolidation of such a new theory.

• Item Type: MPRA Paper
• Language: English
• Keywords: macroeconomic, theories, Pandemic, Rational Expectations, global crisis, Carlos Obregón, Keynes, investors, new economic theory, institutional arrangement, microeconomics, economic growth, policies, theory
• Subjects: A - General Economics and Teaching > A1 - General Economics; A - General Economics and Teaching > A1 - General Economics > A10 - General; A - General Economics and Teaching > A1 - General Economics > A11 - Role of Economics ; Role of Economists ; Market for Economists; A - General Economics and Teaching > A1 - General Economics > A12 - Relation of Economics to Other Disciplines; A - General Economics and Teaching > A1 - General Economics > A13 - Relation of Economics to Social Values; A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics; A - General Economics and Teaching > A1 - General Economics > A19 - Other; B - History of Economic Thought, Methodology, and Heterodox Approaches > B0 - General > B00 - General; D - Microeconomics > D0 - General; D - Microeconomics > D0 - General > D00 - General; D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact; D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; D - Microeconomics > D0 - General > D04 - Microeconomic Policy: Formulation, Implementation, and Evaluation; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D57 - Input-Output Tables and Analysis; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice ; Clubs ; Committees ; Associations; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy; E - Macroeconomics and Monetary Economics > E0 - General > E03 - Behavioral Macroeconomics; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N10 - General, International, or Comparative; P - Economic Systems > P0 - General > P00 - General

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