Her Majesty the Queen was not impressed with the failure of economists to foresee the 2008 financial crisis, as noted in this just released OECD working paper on Surveillance by International Institutions. The paper contains some interesting self-criticism from the OECD on its failure, along with the International Monetary Fund (IMF) and Bank for International Settlements (BIS), to foresee the looming financial crisis and to provide sufficient warning to national authorities and the public. From the paper’s abstract:

The review finds that the institutions did not recognize the need for monetary tightening in a timely way for either the US or the UK, two epicentres of the global crisis. While some concerns were expressed at early stages regarding financial market policies and developments, generally when risks seemed abstract or remote, warnings were too few, received too little emphasis in key editorial sections likely to attract attention and were rarely followed up. Important issues, notably the weak capital base and lack of resilience of the banking systems in the two countries, were missed almost entirely.

The OECD, IMF and BIS should know better next time, unless, like in the lead up to 2008, they think this time it’s different. Given the recurrence of financial crises in the last few hundred years, there’s little reason to think this would be the case.