IMF’s chief economist declared macroeconomics healthy right as the crisis peaked

Evidence

The consensus macroeconomic model, called the “dynamic stochastic general equilibrium model,” could serve no useful function once the crisis hit, because it essentially denied that any such debacle could have materialized. (We document this in chapter 5.) And yet, respected figures within the economics profession could not be embarrassed into acknowledging the deep disconnect between textbook and reality. For instance, Olivier Blanchard, then chief economist at the IMF, pronounced in 2008, “The state of macro is good,” and the profession was enjoying “a broad convergence of vision.” Even that was not sufficiently ill-timed and imprudent to get him booted from the IMF. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 492

Categorization

• CANDY: Blanchard’s ‘the state of macro is good’ in 2008 is a perfect elevator-conversation anecdote about institutional denial.
• XREF: connects to: A leading economist declared the pre-crisis consensus vindicated and its future bright. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2061; The crisis was contained to macroeconomics by orthodox economists’ own narrative — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 548

Broader Connections

• The crisis was contained to macroeconomics by orthodox economists’ own narrative #complicates (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 548