This chapter discusses three issues — accounting frameworks, risk and uncertainty, and the political economy — that have been largely overlooked by the mainstream ‘conservative’ and ‘Keynesian’ perspectives. The first section examines accounting frameworks; this is the lens used to ascertain whether an economy is likely to overheat or slip into recession. We find that widely used accounting frameworks, such as accounting for GDP, often provide misleading information and bear some responsibility for poor economic advice and performance. The chapter next considers how the issues of risk, uncertainty, and information imperfections are at the center of macroeconomic analysis. Risk is always prevalent in an economy, and policies often have unintended consequences. As a result, economists and policy-makers must subject policy decisions to a risk assessment, and should also be responsive to new information. The final section of this chapter looks at the political economy and institutional frameworks within which policy decisions are made.
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