George Akerlof quotes:

In New Classical theory, periods of declining employment - business cycle downturns - may be caused by an unexpected decline in aggregate demand, which leaves workers mistakenly holding out for nominal wages that exceed the new market-clearing level.

My Swedish grandmother was the daughter of a dairy farmer who lived near Hedemora. My Swedish grandfather worked as a clerk for the Swedish railways in the Stockholm station.

Prior to the early 1960s, economic theorists rarely constructed models customized to capture unique institutions or specific market characteristics.

The idea is that in any situation, people have a notion as to who they are and how they should behave. And if you don't behave according to your identity, you pay a cost.

In the late 1960s, the New Classical economists saw the same weaknesses in the microfoundations of macroeconomics that have motivated me. They hated its lack of rigor. And they sacked it.

I think what Bob Shiller and I are doing is we're focusing on macroeconomics and the role of psychology in macroeconomics.

When you give chief executives too much compensation in stock options, they concentrate too much on the stock price, and there is a perverse incentive to raise the stock price, particularly when the chief executive wants to exercise his own options.

My father was a chemist on the Yale faculty, my mother a housewife.

The failure of credit markets is one of the major reasons for underdevelopment.

Keynesian economics has always been needed.

My mother, whose interest in chemistry was rather minimal, nevertheless went to graduate school in the subject and married my father, for whom it was as important as life itself.

Economic theorists, like French chefs in regard to food, have developed stylized models whose ingredients are limited by some unwritten rules. Just as traditional French cooking does not use seaweed or raw fish, so neoclassical models do not make assumptions derived from psychology, anthropology, or sociology. I disagree with any rules that limit the nature of the ingredients in economic models.

Some time ago a little-known Scottish philosopher wrote a book on what makes nations succeed and what makes them fail. The Wealth of Nations is still being read today. With the same perspicacity and with the same broad historical perspective, Daron Acemoglu and James Robinson have retackled this same question for our own times. Two centuries from now our great-great- . . . -great grandchildren will be, similarly, reading Why Nations Fail.