Evolution or Revolution?: Rethinking Macroeconomic Policy after the Great Recession

by Olivier J. Blanchard (Editor), Lawrence H. Summers (Editor)

Leading economists discuss post-financial crisis policy dilemmas, including the dangers of complacency in a period of relative stability.The Great Depression led to the Keynesian revolution and dramatic shifts in macroeconomic theory and macroeconomic policy. Similarly, the stagflation of the 1970s led to the adoption of the natural rate hypothesis and to a major reassessment of the role of macroeconomic policy. Should the financial crisis and the Great Recession lead to yet another major reassessment, to another intellectual revolution? Will it? If so, what form should it, or will it, take? These are the questions taken up in this book, in a series of contributions by policymakers and academics.

The contributors discuss the complex role of the financial sector, the relative roles of monetary and fiscal policy, the limits of monetary policy to address financial stability, the need for fiscal policy to play a more active role in stabilization, and the relative roles of financial regulation and macroprudential tools. The general message is a warning against going back to precrisis ways--to narrow inflation targeting, little use of fiscal policy for stabilization, and insufficient financial regulation.

Contributors
David Aikman, Alan J. Auerbach, Ben S. Bernanke, Olivier Blanchard, Lael Brainard, Markus K. Brunnermeier, Marco Buti, Beno�t Coeur�, Mario Draghi, Barry Eichengreen, Jason Furman, Gita Gopinath, Pierre-Olivier Gourinchas, Andrew G. Haldane, Philipp Hildebrand, Marc Hinterschweiger, Sujit Kapadia, Nellie Liang, Adam S. Posen, Raghuram Rajan, Valerie Ramey, Carmen Reinhart, Dani Rodrik, Robert E. Rubin, Jay C. Shambaugh, Tharman Shanmugaratnam, Jeremy C. Stein, Lawrence H. Summers

Genres: Economics

392 pages, Hardcover

Published April 16, 2019

About the author

Olivier Jean Blanchard is currently the chief economist at the International Monetary Fund, a post he has held since September 1, 2008. He is also the Class of 1941 Professor of Economics at MIT, though he is currently on leave. Blanchard is one of the most cited economists in the world, according to IDEAS/RePEc.

Blanchard earned his Ph.D. in Economics in 1977 at MIT. He taught at Harvard University between 1977 and 1983, after which he returned to MIT as a professor. Between 1998 and 2003 Blanchard served as the Chairman of the Economics Department at MIT. He is also an advisor for the Federal Reserve Banks of Boston (since 1995) and New York (since 2004).

Blanchard has published numerous research papers in the field of macroeconomics, as well as undergraduate and graduate macroeconomics textbooks (including his extremely popular Macroeconomics).

Reviews

[Max Stone · Rating 3 out of 5]

This was probably a great conference but it didn't translate into a great book. For starters, I assume conferences lose something in the translation to just written text that appears at a later point in time (by which time the discussion has advanced on at least some of the topics discussed at the conference).

Beyond that though, the book suffers from the fact that I assume anyone buying a book that arose from a conference on rethinking macroeconomic policy after the great recession likely is already quite interested in and familiar with the topic, and there are large swaths of the book that won't introduce any new thoughts to such a reader, nor much new data. The longest chapter (about 1/6 of the book), by Ben Bernanke, is a good example. It's well written and comprehensive, but I assume that most readers are by now quite familiar with his thinking on the topics of QE, price level targeting, etc.

The book is organized in five sections: longer sections on monetary policy, fiscal policy, and financial policy; and shorter sections on inequality, and international macroeconomic policy. For me at least, the book got more interesting as it went along, although perhaps that says more about what I was already familiar with and what I was ignorant of than it says about the topics being discussed. For example, I thought Jason Furman's section on inequality, and its intersection with growth, and its connection to policy making, was a highlight.

Overall, I think the material is in some conceptual sense 4 stars, but I think it will be more a 3 star experience for most readers.

[Richard Marney · Rating 5 out of 5]

Another in the series where a collection of papers, edited by an Oliver and colleagues is aimed at questioning what have macroeconomists learned since ‘08 and what are the major, present day challenges / policy implications. The title of this book asks whether the necessary policies to address, inter alia, secular stagnation, the ZLB, and the role of finance/capital flows in the global economy represent evolution (tweak the current toolkit) or revolution (new approaches).........I learned a great deal from reading the book, but will not spoil your read! Strongly recommend.

[Ivan · Rating 5 out of 5]

How did our understanding of macroeconomics change since the financial crisis? What did we learn? What was wrong about the things we thought to be true?

Very important lessons from the world top economists.