Abstract

BEZEMER, Dirk J. UNDERSTANDING FINANCIAL CRISIS THROUGH ACCOUNTING MODELS. Rev.econ.inst. [online]. 2012, vol.14, n.26, pp.47-76. ISSN 0124-5996.

This paper presents evidence that macroeconomic accounting models helped to anticipate the credit crisis and economic recession, whereas equilibrium models, ubiquitous in mainstream policy and research, did not. This study traces the intellectual pedigree of the accounting approach as an alternative to neo-classical economics, and the postwar rise and decline of flow-of-funds models in policy use. The paper includes contemporary case studies of both types of models, and considers why the accounting approach has remained outside mainstream economics. Finally, it provides constructive recommendations for revising financial stability evaluation methods, and advocates an 'accounting of economics'.

Keywords : credit crisis; recession; prediction; macroeconomics; flow of funds; neoclassical economics; accounting research.

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