John Quiggin on Zombie Economics

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🗓️ 1 November 2010

⏱️ 65 minutes

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Summary

John Quiggin of Crooked Timber and the author of Zombie Economics talks with EconTalk host Russ Roberts about ideas in economics that should stay dead and buried. Quiggin argues that many economic theories such as the Great Moderation, the efficient markets hypothesis and others have been discredited by recent events and should be relegated to the graveyard. Roberts challenges some of Quiggin's claims and wonders whether proposed alternatives might do even worse than the policies Quiggin is criticizing. Much of the conversation focuses on the role of government in the financial sector and how that might be improved going forward.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you.
0:36.7	Today is October 28, 2010, and my guest is John Quiggan of the University of Queensland. He blogs
0:46.2	at Crooked Timber, and his latest book is Zombie Economics, how dead ideas still walk among
0:53.0	us. John, welcome to Econ Talk.
0:56.1	Good to be here.
0:57.6	And I should say, it's, I think it's October 29th, or you are, is that correct?
1:02.6	It's October 29th, it's, I had it in the morning, it's a glorious day.
1:06.2	And it's 6 p.m. here in Virginia, and nice, and it's also, it's been a glorious day. Now,
1:11.3	your book, Zombie Economics, is an indictment of a set of ideas from economics that you
1:16.3	argue are either destructive or simply wrong, and yet, like zombies, they keep coming back.
1:21.4	They're hard to kill. So I want to start, we'll see how many we can get to today. I want
1:25.6	to start with your first one, which is the Great Moderation. So talk about the idea, what
1:30.1	was the idea behind the Great Moderation, and why do you think it's, it's dead?
1:33.6	Well, so the Great Moderation was a label given to the period starting, I guess, in the
1:39.6	mid 1980s, and going through the mild recessions in the US in around 1990, and for.com, bubble
1:48.7	and bust. And looking back at that period, if you took the right sorts of measures of
1:54.0	volatility, the economy looked a lot less volatile than it had been in the past. And so the
2:00.0	claim was that this wasn't just a lucky draw from the data, this was the product of the
	...

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