Krugmans Explanations
Mainstream economics failure to ‘see the crisis coming’ in 2008 is broadly regarded as a deficiency of the theory. However, Paul Krugman now argues that the theory was - and is - ‘good enough for government’. The failure of 2008 was not in the theory, but rather in deficient data collection. Macroeconomists “overlooked” the institutional changes in the financial sector and did not record appropriate data. The “New Keynesians” - i....