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Systemic failure in macroeconomic modelling

Systemic failure in macroeconomic modelling Terms like systemic crisis and systemic failure are used with increasing frequency particularly by journalists, politicians, as well as academics, to account for things going wrong in an increasingly complex and uncertain world. But what does systemic failure actually mean from a systems thinking perspective, and how might more effective systems reduce incidences of systemic failure? This paper argues that three interwoven traps of modelling contribute as a confluence towards systemic failure – reductionism, dogmatism, and managerialism. Using the example of systemic failure of academic economics in averting the global financial crisis – as expressed by prominent economists themselves – each of the three traps is explored. The confluence of these traps working together are illustrated by ideas from a tradition of critical systems thinking associated with systemic triangulation, and ideas from the science of political economy associated with the ‘iron triangle’. Some practical tools from systems approaches are suggested to counter traps of systemic failure using a suggested heuristic of systems thinking in practice. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Applied Systemic Studies Inderscience Publishers

Systemic failure in macroeconomic modelling

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1751-0589
eISSN
1751-0597
DOI
10.1504/IJASS.2014.065695
Publisher site
See Article on Publisher Site

Abstract

Terms like systemic crisis and systemic failure are used with increasing frequency particularly by journalists, politicians, as well as academics, to account for things going wrong in an increasingly complex and uncertain world. But what does systemic failure actually mean from a systems thinking perspective, and how might more effective systems reduce incidences of systemic failure? This paper argues that three interwoven traps of modelling contribute as a confluence towards systemic failure – reductionism, dogmatism, and managerialism. Using the example of systemic failure of academic economics in averting the global financial crisis – as expressed by prominent economists themselves – each of the three traps is explored. The confluence of these traps working together are illustrated by ideas from a tradition of critical systems thinking associated with systemic triangulation, and ideas from the science of political economy associated with the ‘iron triangle’. Some practical tools from systems approaches are suggested to counter traps of systemic failure using a suggested heuristic of systems thinking in practice.

Journal

International Journal of Applied Systemic StudiesInderscience Publishers

Published: Jan 1, 2014

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