The Yale economics professor, who helped devise the Case-Shiller index for housing market trends, and famously called the dotcom bubble of the early 2000s and the housing market bubble later in the decade, told “Squawk Box Europe” that the world is in a “new age of austerity.”

“Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller said.

Many economists believe that the embattled euro zone has already entered the second part of a double-dip recession , with official figures due out on May 15 expected to confirm as much.

Policymakers across the Western world have tried to combat slowing growth and the long-term effects of the credit crisis through mass liquidity injections over the past 18 months. These have included the quantitative easingprograms in the U.S. and U.K., and the European Central Bank’slong-term refinancing operations.