Samwick argues that economists missed the economic crisis because of empirical errors rather than due to ideological blinders. He argues that Krugman is wrong in saying that the Chicago School and related free-market fundamentalists caused the profession to miss the building problem. The economists Krugman criticizes are not the sort of mainstream Republican economists who advised the Bush administration. Krugman did not predict the banking system failure either. Many economists (including Krugman) were more concerned with a dollar collapse than with a financial collapse.
"Krugman's essay is written as if the failure of economists was a failure of the profession to correctly advise policy makers on what to do, either before the financial crisis or during and after the recession. I don't see the policy advice being given to recent Presidents as being too tainted by this controversy. The Chicago School may not be of much help in getting out of the recession quickly, but neither has it been at the center of policy making. Consider the recent members of the Council of Economic Advisers -- there is hardly a Chicago-school devotee in the mix. Presidents over the last two decades have been getting their advice from academic economists who generally believe that the government has a role to play in making up for weak demand during a recession. If we failed to provide good advice, it has nothing to do with our profession's internal disagreements."
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