Many forecasters have relied on a model that has yielded overly optimistic predictions for the economy’s recovery from the Great Recession. The standard model has performed poorly because it is ill-suited for dealing with housing cycles, especially those that include speculation-driven housing purchases, unusual levels of mortgage credit, and large international capital flows.

Vernon L. Smith is a Member of the Board of Advisors for the Independent Institute and Professor of Economics at Chapman University.
Economic PolicyEconomistsEconomyPhilosophy and Religion
Other Independent Review articles by Vernon L. Smith
Summer 2023 Adam Smith, Sociality, and Classical Liberalism
Summer 2020 Classical Economics: Lost and Found
Winter 2001/02 Demand-Side Bidding Will Reduce the Level and Volatility of Electricity Prices