Standard macroeconomic theory did not help foresee the crisis, nor has it helped understand it or craft solutions. This columns argues that both the New Classical and New Keynesian complete markets macroeconomic theories not only did not allow the key questions about insolvency and illiquidity...

We propose two new criteria to evaluate the appropriateness of a country joining a larger currency area. The first, asymmetric-shocks-on-its-head, argues that asymmetric shocks to real GDP provide an argument for adopting a common currency. The argument comes in three steps. First, independent...

Central banks’ economic and political importance has grown in advanced economies since the start of the Great Financial Crisis in 2007. An unwillingness or inability of governments to use countercyclical fiscal policy has made monetary policy the only stabilization tool in town. However, much...