Purpose of Economic Model: Simulating or Forecasting?

Dimitri Zenghelis, LSE Grantham Research Institute:
An economic model is essentially a simplified framework for describing the workings of the economy. It exerts the discipline of forcing the modeller to formally articulate assumptions and tease out relationships behind those assumptions. Models are used for two main purposes: simulating (e.g. how would the world change relative to some counterfactual if we assume a change in this or that variable) and forecasting (e.g. what the world might look like in 2030). Economic models are great tools for simulations – given what we know about the behavioural workings of the economy, and taking these mostly as given, how might the economy respond to, say, an energy price spike? But models are much less effective at providing forecasts precisely not least because when making forecasts, very little can be taken as given. The further out the forecast, the larger the structural uncertainties making model projections at best illustrative, especially when trying to forecast the impact of non-marginal impulses such as climate change impacts or the transformation of the global energy system.
If economic model can be used for forecasting, why economists failed to predict disruptive event like crisis? To answer this question, you might read Gavyn Davies opinion on FT: Why can’t economists predict disruptive events? or David Orrell's Why we missed the storm.