A computational method for efficiently predicting unsteady transonic flows in two- and three-dimensional cascades is presented. The unsteady flow is modelled using a linearized Euler analysis whereby the unsteady flow field is decomposed into a nonlinear mean flow plus a linear harmonically varying unsteady flow. The equations that govern the perturbation flow, the linearized Euler equations, are linear variable coefficient equations. For transonic flows containing shocks, shock capturing is used to model the shock impulse (the unsteady load due to the harmonic motion of the shock). A conservative Lax-Wendroff scheme is used to obtain a set of linearized finite volume equations that describe the harmonic small disturbance behavior of the flow. Conditions under which such a discretization will correctly predict the shock impulse are investigated. Computational results are presented that demonstrate the accuracy and efficiency of the present method as well as the essential role of unsteady shock impulse loads on the flutter stability of fans.