Equillibrium Based Macro Models Failed To Predict Financial Crisis New Models Proposed

This study by Dirk Bezemer of the University of Groningen, argues that our macroeconomic models based upon equillibrium analysis failed to predict the financial crisis because they are based upon inappropriate accounting models. He describes flow of funds accounting methods that would have predicted the financial crisis based upon the expansion of debt relative to income. He suggests that a new form of economics based upon flow of funds accounting would provide a better basis for macroeconomic models.