Friday, January 09, 2009

Away From Policies and Toward Projects

In their article the Economist summarise the contribution of the new development economists "With her colleague, Abhijit Banerjee, Ms Duflo and Mr Kremer have remade development economics, nudging it away from its concern with policies, towards a preoccupation with projects. They study economic development as seen from the field, clinic or school, rather than the finance ministry".

A question for discussion is whether we need to do the same in countries like Ireland with respect to attempting to deal with business cycle downturns. While the study of macro fiscal policy will always be central or near to the centre of discussions of correcting a downward business cycle, there is a certain sense of futility surrounding current analyses of why we are in a major slump. Perhaps equally as central should be questions on how to define and evaluate on a micro level policies that stimulate start-up companies, innovation and so on.

The paper below by Shiller touches on the role of economic crises in generating institutional innovation and touches on the potential role of behavioural economics in triggering a rethink of institutions.

link here

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