"One of the main economic villains before the crisis was the presence of large "global imbalances." The concern was that the U.S. would experience a sudden stop of capital flows, which would unavoidably drag the world economy into a deep recession. However, when the crisis finally did come, the...

"In this paper I argue that the current core of macroeconomics-by which I mainly mean the so-called dynamic stochastic general equilibrium approach-has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the...