Serious Economics and Simple Books

Abstract

Simple but serious books have an important role to play. So Krugman’s book on ‘depression’ is very welcome. The emphasis of this book is on unemployment (and distribution more generally, including high compensation for finance ‘experts’). The analysis is primarily Keynesian, left-leaning, ‘non-German’, and angry. Krugman argues that expansionary policies will work without endangering financial stability and that there is no need to shed tears on possible (nay, strongly recommended) higher inflation and depreciation of the currency. He advocates non-transparent default on public debt in real terms through higher inflation. Though he is very critical of Efficient Market Hypothesis, he is silent on advances in behavioural finance. We will inter-alia reconsider irrationality, consumer protection, implicit tax-subsidy in low interest rates, and detailed do’s and don’ts relative to higher capital and liquidity with banks. The book is strongly recommended—even for serious researchers and for republicans.