Reforming macroeconomics

Dec 14th 2012, 12:34 by M.C.K. | WASHINGTON, D.C.

CLAUDIO BORIO is one of the world’s most provocative and interesting monetary economists. Based at the Bank for International Settlements in Basel, Mr Borio was one of a handful of people who warned of the financial system’s fragility back in 2003. Now he is out with a new working paper called “The financial cycle and macroeconomics: What have we learnt?” This important paper summarises what we know about booms and busts, Mr Borio’s own suggestions for the next research agenda in macroeconomics, and the optimal policy responses to financial crises. What follows is a summary and analysis of the most interesting bits. Those who are interested should read the entire paper.
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