What theory can we use to get us out of the impending slump quickly and reliably? To use the 'new classical' theory of fluctuations begun at Chicago in the 1970s – the theory in which the ""risk management"" models are embedded – is unthinkable, since it is precisely the theory falsified by the asset price collapse. The thoughts of some have turned to John Maynard Keynes. His insights into uncertainty and speculation were deep. Yet his employment theory was problematic and the 'Keynesian' policy solutions are questionable at best....At the end of his life Keynes wrote of 'modernist stuff, gone wrong and turned sour and silly'. He told his friend Friedrich Hayek he intended to re-examine his theory in his next book. He would have moved on. The admiration we all have for Keynes's fabulous contributions should not sway us from moving on.
- Edmund Phelps
The stampede toward “rational expectations” — widely thought to be a “revolution,” though it was only a generalization of the neoclassical idea of equilibrium—derailed the expectations-driven model building that had just left the station. In the end, this way of modeling has not illuminated how the world economy works.
- Edmund Phelps
Companies like Google and Facebook may offer jobs allowing or requiring imagination and creativity, but the whole of Silicon Valley accounts for only 3 percent of national income and a smaller percentage of national employment.
— Edmund Phelps
No amount of debt restructuring, even debt forgiveness, will help the Greeks achieve real prosperity. What they need is not short-term relief but, rather, a long-term cure.
— Edmund Phelps
Chancellor Angela Merkel and Wolfgang Schaeuble, her finance minister, are right to oppose fiscal and bank unions without political union.
— Edmund Phelps
I've lived to see key parts of my research absorbed in textbooks and in central banks around the world. And some finance ministries, too.
— Edmund Phelps
At the simplest level, economics can better show us the consequences of our actions. Less simple are cases in which we don't have the knowledge to predict the full consequences. Global warming and climate change are examples.
— Edmund Phelps
What brought mass innovation to a nation was not scientific advances - its own or others' - but 'economic dynamism': the desire and the space to innovate.
— Edmund Phelps