EBOOK
About
This lively and provocative look at the tension between economics and politics examines why so many mistakes in economic policy-making are made for political reasons and ignore the economic truths.
Using short-term economic gains to ensure electoral success, argues Lorenzo Forni, inevitably spells macroeconomic disaster. Using the state budget, trade policy and monetary policy to prop up labour markets and the wider economy in order to boost voter approval ratings, while ignoring budget constraints can only result in longer recessions and economic downturns. Which then can incur the painful austerity measures needed to bring the economy back into balance.
Forni looks at many unsustainable economic policies that have been implemented in parts of the world when the economic realities—there is no magic money tree!—would recommend a different and more prudent economic course.
Using short-term economic gains to ensure electoral success, argues Lorenzo Forni, inevitably spells macroeconomic disaster. Using the state budget, trade policy and monetary policy to prop up labour markets and the wider economy in order to boost voter approval ratings, while ignoring budget constraints can only result in longer recessions and economic downturns. Which then can incur the painful austerity measures needed to bring the economy back into balance.
Forni looks at many unsustainable economic policies that have been implemented in parts of the world when the economic realities—there is no magic money tree!—would recommend a different and more prudent economic course.
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Reviews
"An insightful journey through politics and economics, addressing why the former might mismanage the latter. Lorenzo Forni describes in depth the causes and consequences of many policy 'mistakes', all characterized by a common error: forgetting the economic constraints."
Francesco Giavazzi, economic adviser to the Italian prime minister
"This book aptly distills lessons about sound macroeconomic policies from theory and international experiences in a non-technical and user-friendly way. It will be especially useful to non-economists who want to form well-informed opinions about important current debates on the appropriate stance of fiscal and monetary policies. I especially like its key message that prolonged expansionary policie
Teresa Ter-Minassian, former Director, Fiscal Affairs Department, International Monetary F
"A most enjoyable and instructive read with many fascinating country examples. As fiscal deficits explode and central banks remain big buyers of government bonds, Forni's lucid warnings about unsustainable macroeconomic policies could not be better timed."
Philip Turner, University of Basel, and former Senior Manager, Bank for International Sett