The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis; standard models even said bubbles couldn’t exist .. Even after the bubble broke, they said the effects would be contained. Even after it was clear that the effects were not “contained,” they provided limited guidance on how the economy should respond. Maintaining low and stable inflation did not ensure real economic stability. The crisis was “man-made.” While in standard models, shocks were exogenous, here, they were endogenous.
In other words, everything Hayekian economist William White had explained to the bankers and macroeconomists in the early 2000s was true. See also William White’s IMF paper, “Modern Macroeconomics is on the Wrong Track” and his Jackson Hole conference paper.