Healthy economy requires more than innovation, says WUSTL economist

Steven Fazzari discusses his research at recent economics conference

Economic bubbles and the corresponding speculation that
accompany them inevitably end in a financial bust. Depending on
multiple factors, the consequences of these popped bubbles can be grave
or transient.

Steven M. Fazzari, PhD, professor of economics in Arts & Sciences at Washington University in St. Louis, discussed the economic underpinnings of these issues at a recent conference in Toronto.

His comments were based on research published jointly with Bruce Petersen, PhD, professor of economics in Arts & Sciences and former Washington University PhD student James Brown, now on the faculty at Iowa State University.

Fazzari also serves as associate director of the university’s Weidenbaum Center on the Economy, Government, and Public Policy. He sees the need for building a strong macroeconomy that
can establish a healthy demand for the new products and services created
by innovators.

His research suggests that innovation alone is not sufficient to build a healthy economy.

So what can we learn from the history of productive
speculation that would help us anticipate where and how the next bubble
may emerge and how we should respond to it?

Fazzari and colleagues explore these questions in video below of a panel discussion at The Institute for New Economic Thinking’s “Human After All” conference in Toronto.

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Founded in 2009, the Institute is a New York City-based nonprofit think that aims to broaden and accelerate the development of new economic thinking. Its
mission is to nurture a global community of next-generation economic
leaders, to provoke new economic thinking, and to inspire the economics
profession to engage the challenges of the 21st century.