I promised the readers of this blog (September 10, 2010) a comment on Greg Ip’s The Little Book of Economics, How the Economy Works in the Real World. Here it is.
This was one of the hyperboles that went with the rather exceptional intensity of the 2008-2009 financial crisis, but now seems utterly wrong.
Fortunately, Ip proves exactly the contrary in his very clear and easy to understand little book. He uses extensively the best of macroeconomic theories to explain current and past events and policies, as well as the basic rules and mechanisms of growth and fluctuations. In the process he shows a real pedagogical talent for simplification and, more importantly, for judgment. In complicated matters he goes right to the crux of the problem and is able to select the relevant theory in the midst of the generally huge, complex, and mostly uninteresting macroeconomic literature. But he does that without burdening the lay reader with the usual lists of references and quotes that make the reading of textbooks often heavy going and boring.
But professional economists too can find in Ip’s synthesis a useful bird’s eye view of that part of their theories that survived the “trial by fire” of the last few years.
Reading Ip helps one put everyday’s macroeconomic events and policies in an intelligible perspective. Not a small feat indeed.
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