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Will We Get It Right Next Time?

While there were warning signs about the current economic crisis, no one could foresee the full scale of its impact. When forecasting the future, economists will need

  • a better understanding of the interaction between financial and nonfinancial sectors in the economy
  • to look beyond the short term to understand how financial factors relate to innovation
  • to acknowledge that confidence and other noneconomic factors play an important role

An important lesson from the current crisis is that economics cannot rely only on quantitative measures, but also needs to recognize and study how the human psyche reacts to challenges and opportunities.

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