and advances in research following the debt crisis. final remarks there will be plenty of time to continue analyzing where was the profession such that it did not warn of the magnitude of the crisis. as i have discussed here, this is a multifaceted issue that must consider crisis predictability, management, and the role of research in providing rigorous frameworks – albeit incomplete ones – with which to analyze reality. nonetheless, that macroeconomic theory has failed is an overstatement. in particular, the comparatively better performance of emerging economies – with the exception of a few cases such as eastern europe that remind us of our mistakes of the past – demonstrate that economic research has taught us something. in particular, the majority of macroeconomic policies have sought not to replicate past mistakes. now it is necessary to analyze more carefully the role of financial markets, their virtues and, of utmost importance, their vulnerabilities. this crisis is an admonishment to professional arrogance. we must recognize that the real world is much more complex than what our models can explain. this is why so - called professional orthodoxy is discredited. however, we must also avoid the arrogance that comes from ignorance, which leads to abandoning all we have learned about the fundamentals of good macroeconomic policies. references berg, a., e. borensztein and c. pattillo ( 2004 ), “ assessing early warning systems, ” imf working paper, 04 / 52. bernanke, b. ( 1983 ), “ nonmonetary effects of the financial crisis in propagation of the great depression, ” american economic review 73 ( 3 ) : 257 - 76. bernanke, b. and h. james ( 1991 ), “ the gold standard, deflation, and financial crisis in the great depression : an international comparison, ” in g. hubbard ( ed. ), financial markets and financial crisis, chicago : chicago university press. bernanke, b., m. gertler and s. gilchrist ( 1999 ), “ the financial accelerator in a quantitative business cycle framework, ” in j. b. taylor and m. woodford ( eds. ), handbook of macroeconomics, vol. 1c. north holland, amsterdam : 1341 - 93. bordo, m., b. eichengreen, d. klingebiel and m. s. martinez - peria ( 2001 ), “ is the crisis problem growing more severe, ” economic policy

portion of reality. as for the future, the current crisis will certainly provide material for many research studies that will try to figure out what failed and how to avoid making the same mistakes again. still, i think it will be difficult to develop simple, manageable models that can make substantive progress in having a complete description of reality. some interesting efforts will most likely be made, but it will not be easy for them to become part of the heart of macroeconomics, since they will be necessarily complex. many of the models we currently have available are not only mathematically sophisticated, but their results are obtained by computer - based calibrations whose essential mechanisms lack transparency when it comes to revealing how they arrive at their results. hence, it is difficult to assess their consistency. we have often come across complicated models where an apparently innocuous condition ends up being the determinant of the results. complexity also jeopardizes the capacity to move from scientific research to economic policy proposals. for academic ideas to be useful in economic policy, they must be persuasive. perhaps that was the virtue of the is - lm model that was used for many years in macroeconomic policy discussions, or of solow ’ s growth model that to this day remains the cornerstone of economic growth research. fortunately, this is not a time where prescriptions are taken by policy makers without scrutiny – and are later labeled as orthodox – and therefore, the capacity to intuitively explain a result is essential. the bulk of theoretical research will continue to proceed in areas where its results have a good chance of being published, often at the expense of realism. it may not be very profitable from the academic point of view to incorporate elements of irrational behavior, confidence crises or other anomalies into general equilibrium models that are used in policy design. nor is it easy to include elements of political economy, in particular the influence of interest groups, which in the us financial system are relevant to understanding the evolution of regulation and the causes of the crisis. in the case of the central bank of chile, two models are mainly used to forecast, both within the tradition of forward looking rational - expectations models. one is built with many econometrically estimated reduced - form equations ( mep, see central bank of chile, 2003 ), while the other is a general equilibrium intertemporal model ( mas, see medina and soto, 2007, for an application ). although the latter has stronger fundamentals, its calib