Whether or not economists could, or should, have predicted the financial crisis, there is an unprecedented urgency and demand for the profession to make itself a little more useful than it currently is. This working paper argues that economists have two main tools at their disposal, both of which are shockingly under-utilized. The first is counterfactual analysis - the ability to construct alternative histories to robustly assess what has transpired to be. The second is scenario building - the creation of alternative futures to interpret and respond to what is to come.
Citation (Chicago Style)
Evans, Anthony J.. "Projections Past and Future: Economic Imagination and the Financial Crisis 2007 - 2012." Working Paper, Mercatus Center at George Mason University, August 2009.