Talk About A Pathetic Defense
"The Economist’s briefing also cited as an example of macroeconomic failure the “reassuring” simulations that Frederic Mishkin, then a governor of the Federal Reserve, presented in the summer of 2007. The charge is that the Fed’s FRB/US forecasting model failed to predict the events of September 2008. Yet the simulations were not presented as assurance that no crisis would occur, but as a forecast of what could be expected conditional on a crisis not occurring."
Get that? The forecast was not really meant to be a forecast even though it was presented as a forecast and requested for the purpose of forecasting, but simply a description of what would happen if it happened.....
Well, just about anything can be posed as happening if it happens, including theoretically absurd things like pigs flying by flapping their ears, cats going vegetarian or all prices being fully flexible. Indeed, the whole "New Classical" macroeconomic model is really nothing but a mixture of a few sensible theories with many really absurd assumptions (like full price flexibility) formulated for the purpose of making the model mathematical.
The bottom line is that New Classical models have no real world applicability or relevance. And since the New Classical models are often presented as the only alternative to [New] Keynesian models, they are doing a lot of harm by making the harmful Keynesian models appear relatively more credible.