Virus Recession Gives Economists a Shot at Redemption
Devising policies that work might make up for the field’s bungled response to the 2008 crisis.
Improving vision?
Photographer: LILLIAN SUWANRUMPHA/AFPMacroeconomists famously mishandled the crisis of 2008. Their models mostly excluded the financial sector, making it difficult to foresee the possibility of a crisis like the one that happened. In the aftermath, some argued heavily against fiscal stimulus, blunting countries’ ability to respond effectively. And some warned of inflation that never even came close to materializing.
But with the coming of the coronavirus depression, macroeconomists have a golden opportunity to redeem themselves. Shutdowns have given theorists some time to think about what’s coming. This downturn is going to be bigger and more complicated than the last one, which only increases the need for theories to anticipate some of the potential scenarios.