The Current Financial And Economic Crisis: Empirical And Methodological Issues

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Executive Summary

In this paper the authors describe the main causes of recent financial crisis as a result of many theoretical, methodological, and practical shortcomings mostly according to heterodox, but also including some important orthodox economists. At the theoretical level, there are problems concerning teaching and using economic models with overly unrealistic assumptions. In the methodological front, they find the unsuspected shadow of Milton Friedman's 'Unrealisticism of assumptions' thesis lurking behind the construction of this kind of models and the widespread neglect of methodological issues.

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