Time for a Copernican revolution in economics

No mainstream economic model predicted the GFC, but alternative approaches are still largely ignored. The heavily-flawed traditional modelling approach needs some serious revisions, before the next financial crisis.

The global financial crisis took the vast majority of the economics profession by surprise. Though there were individual mainstream economists -- such as Robert Shiller and Joseph Stiglitz -- who claim to have warned of the crisis, no mainstream economic model foresaw anything like what eventuated in 2007. In fact, mainstream model predictions led to politicians being advised to expect tranquil economic conditions ahead. The OECD’s advice in its June 2007 Economic Outlook was typical:

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