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The Holy Grail of Macroeconomics -- Richard Koo


merkhet
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  • 2 weeks later...

A good book for anyone interested to understand Japan's lost decades. Also relevant today because of parallels to the current US and Euro situation and certainly explains why Bernanke's huffing and puffing is not working.

 

His arguments appear compelling but could not bring myself to be fully comfortable with his analysis because of his obvious bias (in trying to push his thesis) which is based on a sample of one (Japan). This is more a reflection of my shortcomings as an economist (which I am not) - I just did not feel competent enough to critically evaluate his thesis.

 

It does seem that FFH and Lacy Hunt are big believers as is apparent from their actions - deflation bet and lengthening bond durations.

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  • 3 years later...

thanks for the recommendation!

 

Still reading this one, but 'wow' - finding myself really taking to his the message

 

I'd agree that he may be trying too hard to show the data to back up his point... but his points seem to have alot of merit (limits of monetary policy, evolution of current economic theory, diff types of recessions, monetary vs fiscal stimulus... even a mild defense of 'gold standard' - haha)

 

all in all, one of the most edifying econ books i've read

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I dont like the book much. He claims that fiscal spending gets a country out of the mess. That is exactly what Japan has been doing (allthough with some lag), and it has failed quite horribly.

 

Also he, like many other economists ignores the micro aspect and only looks at abstract things like investment and debt, because it is easier (but doesn't make it  any less incorrect and incomplete). It is like analyzing a car what makes a car move, and then ignoring it's engine because it is too complicated.

 

He also get some things wrong about the money multiplier and investments and savings.

 

Personally think that Dalio's paper explains it much better, and is much completer (and is written by someone who succesfully puts a lot of money where his mouth is).

 

And it is free and easier to understand then the vast majority of macro economic texts out there:

 

http://bwater.com/Uploads/FileManager/research/how-the-economic-machine-works/ray_dalio__how_the_economic_machine_works__leveragings_and_deleveragings.pdf#page=2

 

And this guy actually predicted several disasters and made money on them. Not some dried up dusty old government worker who never had to back up his claims for 2 decades (and has been wrong about a lot of them).

 

Just FYI :)

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