Preface
1. Introduction
2. Classical Economics
3. Keynes and the World Economy
4. Where the Keynesians Lost Their Way
5. The Rational Expectations Revolution
6. How Central Banks Impact Your Life
7. Why Unemployment Persists
8. Why the Stock Market Matters to You
9. Will There be Another Great Depression?
10. Will Monetary and Fiscal Policy Work?
11. How to Solve a Financial Crisis
Glossary
Notes
ROGER E. A. FARMER is a 2013 Senior Houblon Norman Fellow at the
Bank of England. He is a Distinguished Professor of Economics at
UCLA and served as Department Chair from July 2008 through December
2012. The author of six books and numerous academic journal
articles, he is a Fellow of the Econometric Society, a Research
Associate of the National Bureau of Economic Research and a
Research Fellow of the Centre for Economic Policy Research.
Professor
Farmer has served, and continues to serve, as a consultant to
central banks around the world. He is a regular contributor to the
Financial Times, Project Syndicate and VoxEU. He is a co-winner of
the 2013 Maurice
Allais Prize in Economic Science for his work on the inefficiency
of financial markets; and in 2000, he received the University of
Helsinki medal in recognition of his work on self-fulfilling
prophecies.
"Roger Farmer offers a new diagnosis for what ails the economy. His
clear and forceful writing encourages policymakers and the public
to think out of the box and reach for new solutions."--Greg Mankiw,
Professor and Chairman of the Economics Department at Harvard
University
"In the morass of me-too books about the financial crisis, How the
Economy Works stands out as a truly big idea." --BusinessWeek
"Bringing new research to life in guiding policy in the aftermath
of the financial crisis, Roger Farmer takes the economic ball up
the middle between Hayek and Keynes. With an emphasis on swings in
confidence and wealth, Farmer's criticisms of fiscal stimulus and
interesting prescriptions for monetary policy should be essential
reading for anyone trying to understand what happened, especially
for economists and policymakers focused on recovery.
Nonspecialists
will find the book full of fascinating stories; economists will see
some surprising new twists."--Glenn Hubbard, Dean of the Columbia
Business School, Columbia University, former Chairman of the
Council
of Economic Advisers
"This is an important policy proposal from a top thinker. Farmer
balances the traditions of Hayek and Keynes to formulate a new way
to stabilize the economy-and to solidify society's confidence about
its future prospects. He returns us to first principles and builds
a clear, succinct argument in language that is easy to follow. No
policymakers are rushing to adopt Farmer's approach; but the same
was true for Keynes in the 1930s. Let's hope we don't need to
experience another Great Depression before our economic leaders are
seriously willing to rethink everything."--Simon Johnson, Ronald A.
Kurtz (1954) Professor of Entrepreneurship at the MIT Sloan School
of
Management, former chief economist at the International Monetary
Fund
"Farmer provides an excellent discussion of what went wrong with
modern economics in the run up to the recent crisis. And to deal
with the effects of the financial crisis, boosting investment and
employment in the short and the long run, he provides a policy plan
to induce a rapid and sustainable recovery through direct
intervention in the stock market. If he is right it would improve
things quickly, and if he is wrong the tax payer ends up receiving
dividends
through the Central Bank investment portfolio. It is worth a
try."--Ray Barrell, Director of Macroeconomic Research and
Forecasting, National Institute of Economic and Social Research,
UK
"Readers with a serious interest in this subject will find this
timely book informative..."--Publishers Weekly
"Readers who lack the time or interest to sift through in-depth
explanations of economic theories will gain from Farmer's brief
explanations of standard economic theories and biographical
sketches of major thinkers."--Library Journal
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