30 Ways to Be an Economist is INET's grantee interview series - INET grantees talk about how they do their work, and how they came to be doing it. This week: Stephen Kinsella - Irish Crisis Demands New Economic Thinking.
Most "state of the art" macro models trivialize financial flows and largely neglect the interaction between finance and industry. That is why they failed at predicting and illuminating the collapse of the Irish economy. Stephen Kinsella sets out to provide a remedy: starting from a web of balance sheets, stock-flow-consistent models make it possible to trace the financial flows connecting firms and banks, households and government. Kinsella moves beyond mere simulation, and empirically calibrates a stock-flow consistent model of the Irish economy with the goal to inform policy -- this is new economic thinking.