Shadow Banking
November 21, 2012 at 13:46 PM EST
The Arrow-Debreu model provides the foundation for modern macroeconomic theory and the theory of finance. This is probably as it should be. But like most foundations, it is just a place to start. As John Geanakoplos explains here, the AD model is “relentlessly neoclassical.” And what this means, among other things, is that the basic AD [...]
