After two years since the Financial crisis of 2008 began, it has become clear that traditional macroeconomics policies has failed to match both, markets and entrepreneur needs. This failure goes into two lines :
a.- It did not anticipated the outcome of the housing bubble : The financial crisis of 2008, the subsequent stagnation , and the Euro tragedy .
b.-It did not have the proper analytical framework to face the crisis ,(lack of microeconomics foundations), which is an essential reference for policy design .-
Although it is possible to discuss further on about the two previous points(specially the second one, for example taking into account the importance of politics ; very much closer to economics and policy decisions), current expectations are no substantially better than a year ago, even though the QE (quantitative easing) has been applied, austerity measures have been implemented (Europe),and Banks have endured three years of adjustments to take control of l solvency and liquidity problem .
It seems that something it is missing in the whole framework of analysis. A recent article written by Joseph Salerno (Quarterly Journal of Austrian economics, Vol 15 Nº1l 3-44,Spring 2012) is quite clear about this missing variable: It says (page 37):
“Entrepreneurs have discovered that their spectacular success during the boom were merely a prelude to a sudden and profound failure of their forecast and calculations to be realized. Until they have regained confidence in their forecasting abilities and in the reliability of economics calculations ,they will be understandably averse to initiating risky ventures even if they appear profitable”.
Negative real interest rate, send the wrong signal for new ventures as long as it distort the adjustment process to realign the productive structure . The reallocation between those with high time preferences (consumers), to those with low time preference (capitalist-entrepreneurs), is badly influence by such a low interest rates.-
Besides, let recall that learning abilities area heterogeneous , and it comes along at a asymmetrical pace. Thus some of them will learn faster than others, but any action which interferes with this learning will make it even slower, and the entrepreneurial spirit necessary for any full and robust economic recovery will shy away longer than expected.-
What are the implications?:
a.- To accelerate entrepreneur learning and adaptation to new scenarios, leaving aside wrong and disturbing signals and shifting up business expectations.-
c.- Monetary interventions ,seem to have a decreasing marginal impact to improve conditions for new business .It was helpful at the beginning, but its usefulness seems to be decreasing over time.
