The crisis reflects a major intellectual failure of macroeconomics to understand the macroeconomic importance of

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The crisis reflects a major intellectual failure of macroeconomics to understand the macroeconomic importance of the financial system. Many economists failed to see the risks and vulnerabilities inherent in the financial system and did not appreciate the complex interconnections and feedback effects between the financial sector and the real economy. This led to a failure to predict, prevent, or mitigate the financial crisis and its devastating consequences for employment, growth, and overall economic welfare.

The Crisis Reflects a Major Intellectual Failure of Macroeconomics to Understand