Publications: Notes at the Margin

Misunderstood: Economic Impacts of Energy Crises (July 11, 2022)


The world is in the midst of the fourth energy crisis in fifty years. My career as a professional economist spans them all. Having analyzed each in various capacities, I have concluded that all analyses published by the economics profession to explain them and predict their effects are wrong. Consequently, the actions pursued by economic policymakers today will fail.


This failure will result in a severe recession and possibly a depression. Ultimately, Russia, the nation that started this catastrophe, will be the most significant long-term loser.


Here, I try to explain this thinking. I hope I am wrong. However, the situation looks terrible. I begin by discussing the “econometric infatuation” of the economics profession with energy crises. Next, I note that devotees of econometric forecasting at the World Bank have written something understandable, if not helpful, on the current situation. I then comment on why models are necessarily unsuited to the past and the current situation. I end with a commentary that can be summarized with a phrase: “This time will be terrible.”


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