February 10, 2011
Dismal economies are often dismal for economists. Respected figures find themselves defending discredited theories or justifying why they failed to see trouble coming. But calamity can also clear paths for new ideas. The Depression was the backdrop for the work of John Maynard Keynes. The stagflationary 1970s vindicated Milton Friedman: a generation of liberalisation followed.
The Economist asked members of “Economics by invitation”, our online forum of more than 50 prominent economists, to nominate colleagues with the most important ideas for a post-crisis world. The respondents came up with nearly 20 different names. None won an absolute majority, but a few cropped up more often than others (see table).
First among them is Raghuram Rajan of the University of Chicago, whose book Fault Lines argues that rising inequality led governments to facilitate credit growth, contributing to the crisis. Robert Shiller of Yale University has long warned of the dangers of irrational exuberance, and urges colleagues to consider “animal spirits” in assessing economic fluctuations. Kenneth Rogoff’s work on debt bubbles with Carmen Reinhart placed the crisis in an 800-year continuum of borrowing and collapse: his papers have earned the most academic citations of the table-toppers in our poll. Barry Eichengreen has written excellent works on the history of the gold standard and the danger of fixed-exchange-rate regimes. Nouriel Roubini earned the nickname “Dr Doom” for warning of an impending global crash.