Pursued Economy

Preface

The last few years have been difficult ones for many people, including economists, as the COVID-19 pandemic and the war in Ukraine have ravaged economies around the world. But economists' problems started earlier. The failure of the vast majority of economists in government, academia, and the private sector to predict either the post-2008 Great Recession or the degree and length of its severity has raised serious credibility issues for both the political establishment and the economics profession. After all, the Great Recession started from within—it was not caused by exogenous factors such as a new virus strain or military adventurism by an autocrat.

The widely varying opinions of these “experts” on how this recession should be addressed, together with the repeated failures of central banks and other policy makers to meet inflation or growth targets in spite of astronomical levels of monetary accommodation, have left the public rightfully suspicious of the establishment and its economists.

The concept of the pursued economy, together with the author's earlier concept of balance sheet recessions, is an attempt to explain why an economy that was strong and vibrant loses momentum and stagnates for an extended period of time. While the war in Ukraine and post-pandemic supply constraints have recently pushed inflation rates higher, many people have experienced stagnant real incomes for years, if not for decades, prompting a large part of the population to feel left behind ...