The lack of a major crisis since the Great Depression of the 1930s naturally caused economic theory to focus mainly on secular growth, and to some extent on cycles, while ignoring crises. This myopia explains, to a large degree, the lacuna concerning “economic theory of a crisis” during the third part of the twentieth century. Thus, most theories were ill-prepared to tackle the surprising global financial crisis of 2007/8. Three topics serve as the focal points for this broad re-examination of macroeconomic thinking over the last century: the changing views on the Keynesian Revolution; the distinctive Austrian view on methodology; and the changing status of empirical macroeconomics during the twentieth century.
Keynes(ians) and Hayek(ians) From the Great Depression to the Long Recession