What economic theory really says about the role and conduct of economic policy?

Join Professor Joseph Stiglitz as he presents the Goldsmith Lecture at the annual Society for the Advancement of Economic Theory (SAET) 2022 conference.

In recent decades, there have been notable advances in both macroeconomic and microeconomic theory, but unfortunately, many of these advances are predicated on models and assumptions that are distant from actual economies, and provide less guidance that one would have hoped.

This lecture considers three examples: macroeconomics, based on DSGE models; climate policy, based on IAM models; or incentive models, based on the conventional model of consumer behaviour.

In the first case, the models supported policies that led to the Great Recession and provided little guidance on how to respond.

In the second case, they have put economists at odds with the rest of the scientific community, which is worried about any increases in temperature beyond 1.5 to 2 degrees Celsius.

In the latter case, excessive reliance on material incentives has sometimes resulted in poorer performance. There are alternative theoretical approaches, however, that hold out the promise of better and more relevant guidance for the conduct of economic policy.

About Professor Joseph Stiglitz

Joseph E. Stiglitz is an American economist and a professor at Columbia University. He is also the co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the Chief Economist of the Roosevelt Institute. He was awarded the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979.

He is a former senior vice president and chief economist of the World Bank and a former chairman of the US Council of Economic Advisers. In 2000, he founded the Initiative for Policy Dialogue, a think tank on international development based at Columbia University. In 2011, he was named by Time magazine as one of the 100 most influential people in the world. Known for his pioneering work on asymmetric information, his research focuses on income distribution, climate change, corporate governance, public policy, macroeconomics and globalisation. He is the author of numerous books including, most recently, People, Power, and Profits, Rewriting the Rules of the European Economy, and Globalization and Its Discontents Revisited.