I was invited to contribute to an Economist symposium on Olivier Blanchard's guest essay. My piece is here and here is my bottom line:
Most of all, I don't think we are paying enough attention to the
placebo idea. It is well known in the medical literature that sometimes
placebos work as well as the drugs themselves.
Here is the complete set of essays, featuring Shiller, Caballero, Alesina, Thoma, and others. Here is Bryan Caplan making a similar point about placebos.